My Weekend Ritual Part 2 – Weekly Financial Check

As I mentioned in the last post, money is one of those key resources that is very important to marshal.

Often budgeting and personal finance are usually sold in a cold rational terms, in terms of balance sheets and quantifiable wealth – it’s sold as a way to become rich (or at least get out of debt). David Ramsey and other famous gurus talk about budget as a key way of avoiding debt, reaching a life of wealth and physical comforts, being generous and doing good things.

Often they will observe how money issues spill over into other parts of peoples’ lives impacting relationships. This brings us to any important (and often overlook fact) about money:

Money is an emotion shaper and amplifier.

Emotions runs through money like rivers with eddies, rapids and unpredictable undercurrents imprinting everything.

For instance, a large part of the stock market is gauging “market sentiments” – basically, how investors feel – are they confident? Scared? Greedy? Fearful? Market movements (especially short-term movements) are often based on perception rather than actual change in circumstances. Another great example are lottery winners. Lottery winners often report major changes to their relationships as both they and their family and friends change because of the money.

So managing your money is just managing your financial life – it’s also a key part of managing your emotional life.

Fail to manage your money and you are letting a large of your emotional life blow in the wind at your own peril. And the consequences can quite severe. Money is a big source of tension in relationships. Heck, it leads to prolonged stress that can impact your health.

Tracking your money is like having key check in conversations with the important people in your life. So part of my weekend ritual is checking in on the money, not only for my financial goals but also for my mental health.

In last post, I discussed making your week’s worth of lunch on the weekend – a habit that helps your health (as well as many other benefits). Another benefit is that you feel settled and ready to take on the week. Peace of mind. This is also why I do my weekly financial check.

Because for me, money can be really scary, especially the less I know. And that’s why I do a weekly financial check, it gets the monkey off my back and in front of me so I can evaluate it and get a balanced perspective.

Financial Check

First off, a weekly financial check is different than a budget. A budget is the process of allocating your money over a period (often a month). The financial check is an extension of your budget.

The goal of a financial check is a quick review of your banks, bills, last week’s spending and upcoming week’s spending. It is a quick snapshot so that you understand your financial position and that you have enough money for the next week.

Some other important benefits include:

• routine review of your accounts to catch any strange financial events, such as scams, unintentional overcharging, unpaid bills
• a frequent accurate reminder of expenses (which over time I underestimate) and surplus money (which over time I overestimate)
• peace of mind that you understand your financial situation and can take appropriate actions

How to set up a Weekly Financial Check

A key set of concepts used in the weekly financial check are fixed and variable costs. Fixed costs are are difficult to change on short-notice – for instance rent or mortgage. Conversely, variable costs are easy to change on short notice – such as beers with friends. If you are short on money, you simple forgo beers with your friend (variable costs) rather than not paying rent (fixed costs).

You need to following items to set up a weekly financial check:

• a completed budget with calculated allocations in the following variable expense groups – transportation, food, entertainment, clothes/gifts, everything else (if you haven’t completed one look here)
• six small jars labelled transportation, food, entertainment, clothes/gifts, everything else, and credit
• cash equal to your week’s worth of variable expenses
• this weekly financial check template

I like to do my financial check on Friday nights as usually I spend a large bulk of the weekly money on groceries, entertainment and other things. So once you have the items above:

1. In the financial check template, update the items in the Money Coming In sections and Money Going Out according to your budget. Money Coming In consist of all income streams. Money Going Out consists of fixed expenses, variable expenses and money put aside for savings.
2. Fill in the values for Money Coming In, and Money Going Out.
3. If Left Over value is positive, congratulations, you have enough money for the week. If Left Over is negative, you don’t have enough money and need to adjust your variable expenses and savings.
4. Now distribute your cash into the six jars based on your allocation of variable expenses (see your budget). For instance, if you have budgeted $150 for your variable transportation expenses, put $150 into the transportation jar. Leave the credit jar empty.
5. Pay all your fixed costs for new bills, credit card balances, etc.
6. For the week, use the cash in the jars for your variable expenses (except the credit jar). Once the jars are empty of cash, you no longer have an money for the week and have used up your budget.
7. If you do use a credit card on any variable purchases, take the amount of money you charged on your credit card from the relevant jar and place that money in the credit jar. This money will be used to pay the credit card bills.
8. Any money left over in the jars (beside the credit jar) can be used as you wish.

Turning this into a regular habit has helped limit my money-related stress and definitely increased my confidence.