Step 25: Start a Monthly Finance Review

In step 18 we looked at starting a weekly finance review and what to focus on during that weekly half an hour, to ensure you stay on track for that month’s spending, bills and goals.

Today we are going to take this one step further, by starting a monthly finance review, in addition to your weekly review. Whereas the weekly review is incredibly useful to ensure you achieve your monthly goals, the monthly review helps you to achieve your longer term goals that you set out to achieve, such as becoming debt free, getting to a certain net worth or saving a specific amount of money. It is the moment to plan and look ahead a little further and to readjust your goals and spending patterns.

During most months you can probably combine every fourth weekly review with your monthly review, although for your monthly analysis you will need to set aside more time, as you are analysing the entire past month and also looking further ahead. I recommend scheduling in roughly 2 hours every month to complete this step.

Step 25 – Start a monthly finance review – in detail:

• As with the weekly review, the first thing to do is to find a moment in your busy schedule to spend about 2 hours on this. Take your agenda or calendar and schedule in this appointment with yourself at a time that works for you. The most natural moment to do this is usually during the last 2 or first 2 days of the month, but decide what is best for you.
• During your first monthly review, start again by scheduling in when you’ll hold your next review. Plan around birthdays, trips, work appointments etc. If closer to the time you find you have to move the original appointment then please do so, but at least you won’t forget about it in this way.
• Go through the following steps during your review:
  • If the monthly review coincides with your weekly review, start with that first.
  • Close your budget from last month, making sure everything is correctly registered and that any outstanding bills have been paid and transfers have been made.
  • Calculate your cash flow for last month, following the instructions from step 12.
  • Check how you did with your “reduce-1-expenses” challenge and calculate how much money you saved.
  • Transfer that money to its designated account / goal, at first this will probably be your emergency fund and after that the paying off of a debt, but this might change over time.
  • Decide on the limiting of one expense: can you take this any further, or can you focus on a different expense? Or will you simply continue with the same expense and amount as last time?
  • Read through your goals again making sure your budget aligns with your goals. If not, make any necessary changes.
  • See how you are doing with your emergency fund. Are you close to achieving your target, or have you still got a long way to go? Is there anything you can do to speed up the process?
  • Update the debts amounts, your assets list and calculate your current net worth.
  • See how you are doing on your net worth goal that you set in step 7.
  • Calculate the amounts and relative percentages you spent on fixed, variable, discretionary and savings expenses and whether they were in line with your budgeting targets.
  • Budget for next month, following the steps outlined in step 17.

Although the weekly review is a great habit to help you stay on track and within your budget on a monthly basis, the monthly review is designed specifically to make sure you will achieve your goals over a longer period of time. You might at the end of some months notice you want to update a goal or add in new goals, which is absolutely fine. The goals as I’ve said before are not supposed to be something that you set once and then stick to forever. Situations and your aspirations change, and so should your goals if needed. Make sure to start this monthly review as per this month as I am sure that with time you’ll see the tremendous added value it will give.

Read more about my 100 steps mission to financial independence or simply decide to take control today and join us on our step-by-step quest on how to make your finances work for you, starting with step 1.

Inge