The other day we went over how to track your income and expenses. Congratulations on figuring that out!

So let’s say you’ve been tracking your income and expenses for a while. Now what? It’s not like those numbers will do you any good if you ignore them, but exactly what are you supposed to do with them anyway?

Never fear, the answers are here!

The quick weekly review

Your weekly reviews will be pretty quick and easy. Eventually you won’t need to do them at all; you’ll just do monthly overviews. But for the first few months at least, plan to sit down once a week and take 10 minutes to an hour to review things. Do you remember why you’re tracking everything? Well, this is the first step to accomplishing that. Here’s a good approach:

  • Pick a day of the week that you typically have some time and always do your review that day. Sure, you might have to reschedule occasionally, but try to be consistent. If you share expenses with a significant other, be sure you’re able to sit down together. Even if one of you primarily handles the money, it’s important for you both to be involved with this. Maybe Monday nights after dinner, Thursdays before work, or Sunday mornings after breakfast. Whatever works for you.
  • Gather up your receipts from the week, both paper ones and emails.
  • Also grab your notebook, spreadsheet, app, or whatever tracking method you’re using for tracking.
  • Make sure your tracking is complete.
    • First, make sure all of your receipts are entered in your tracking.
    • Next, make sure you’ve added any non-receipt cash transactions into your tracking.
    • Pop online and check your credit and/or debit accounts to make sure you’re not missing anything. If you are, add it in.
  • Look at all of your transactions from the last week. Do any of them pop out as odd? Are you surprised that you spent so much on dog toys? Did you think you’d make more on that babysitting job? Make a mental note. The goal here is to just be aware of these surprises. (Unless something looks all-out wrong, of course. Then call up the company and find out why you were charged the wrong amount.)

That’s it! See, it’s actually really simple and easy. Nothing to worry about here. The idea of reviewing finances freaks people out, but the reality is that these weekly check-ins are super easy.

Your goals are simply to make sure you’re entered everything while it’s relatively fresh in your mind (yeah, you think you’ll remember what that $12.75 was spent on, but you won’t) and to be aware of what you’re spending and earning. That’s it.

The monthly overview

Choose a day once a month that you can do this. It should be some time in the week after you get your monthly bank statement. Set aside a few hours at first. Later on you’ll probably only need an hour or two per month for this, but expect to spend a bit more time on it at the beginning as you’re getting the hang of things.

There’s no need to make this complicated. Just go step by step and keep it simple. Remember, you’re looking to understand your own spending and earning, so it doesn’t matter what anyone else does. Make this process your own. Here’s a straightforward way to get started:

  • Sit down with your tracking info. Also grab your bank statement(s).
  • On your bank statement, find your beginning balance. Let’s say it’s $2500.
  • On your tracking app, spreadsheet, etc., add up all of your income from the last month. Let’s say the total is $3000.
  • Add up your tracked expenses from the last month. Let’s say the total is $2000.
  • Now you’ll do three things:
    • First, make sure your tracking matches your bank info. Keep in mind that your credit card bill and others might not have cleared your bank account yet, so adjust for that. Take your beginning balance, add your income, and subtract your expenses. Does that match your ending bank balance? (beginning balance + income – expenses = ending balance) In our example, it would be $2500 + $3000 – $2000 = $3500 so your ending bank balance should be $3500. If this doesn’t add up, figure out why and fix it!
    • Second, take your tracked income and subtract your tracked expenses. In this case, $3000 – $2000 = $1000. Ask yourself, how do you feel about this? Did you spend more than you earned this month? If so, was it acceptable? Will it happen again? Are you saving as much as you’d like? Could you be saving more?
    • Third, review each of your earning and spending category totals. When I say “review” I just mean “look at and consider.” How much did you spend on hobbies, meals out, concerts, car insurance, and everything else? How do you feel about those expenses? Do any of them make you cringe? If they do, try to spend less next month. How much did you earn at your main job and on side jobs? Is it what you expected? If not, make adjustments next month. In any category that surprises you, look at the individual transactions to see what caused the change.

I say it all the time: personal finances is about emotions more than math. This exercise is a perfect example of that. If you feel overwhelmed, that’s ok. If you feel embarrassed, that’s ok. If you feel happy, sad, angry, or upset, that’s ok. The only thing that isn’t ok is walking away, because ignoring the problem won’t fix it. Let yourself feel uncomfortable for a bit, and remember that doing this will make those unpleasant feelings go away!

The yearly roundup

You’ll notice quickly that every month is different. So to see the big picture you can’t just take one month and multiple it by 12 to see a year, or by 120 to see a decade. That’s where the yearly roundup comes in. Every January, do this:

  • Add up all of your income for the year. Add up all of your expenses for the year. Subtract your income from your expenses. That’s how much you saved or went into debt in the last year. How do you feel about that? Is it what you’d like? If so, great! If not, you’ll need to make some changes for next year.
  • Look at the totals for each income and expense category. How do you feel about these? Find your 5 highest expense categories. Is this where you want to be spending your money? Think about what you might want to change in the coming year.
  • How much money do you have saved up? How much debt do you have? Are you on track to do whatever it is you want to do? Whether it’s retirement, buying a house, going on vacation, paying off debt, or anything else, think about what changes (if any) you need to make to make these things happen.

What happens next

Congratulations on doing your first weekly, monthly, and (eventually) yearly reviews! This is huge! You’re now well on your way to financial success!

There’s more you need to do, but it all flows from this. As you become more aware of your cash flow, you’ll automatically start making some unconscious choices that result in saving more money. You might think twice about buying that skirt that you don’t really need. You might work a little overtime with your trip to Paris in mind. You’ll start noticing these changes as your monthly income moves up a bit and your monthly expenses drop down a bit.

But of course, you’ll need to make conscious changes too. You’ll need to set goals and make a plan to reach them. But that all comes later. I’ll cover it in other posts. For now, don’t worry about all of that.

For now, making these reviews a positive habit in your life and they will give you the solid foundation you need to start making the changes you’re looking for!

If you missed the first two parts of this series, check out Why tracking your income and expenses is your best path to success and How to track income and expenses. Then comment below and let me know how it’s going!

And if you’d like to use my spreadsheet to add up your income and expenses and see how much you’re saving, enter your email address here and I’ll send you a free copy:

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