Monitor Your Accounts and Establish Sinking Funds
Now that you have set up and are tracking your basic budget, you can begin to go in and make small changes that will give you better control of your finances.
The first thing you will want to do is regularly monitor your accounts. You can do this several different ways, depending on how thorough and accurate you like your personal bookkeeping to be.
- Check all receipts against statements and then balance your checkbook and compare final totals. (Most thorough and time-consuming. Essentially, all debits and credits are double-checked.)
- Check all receipts against statements. (Debits and credits are single-checked.)
- Scan bank statement and check on anything that seems out of the ordinary. (A weekly check like this is the minimum you should do as it gives you a chance to catch fraud early on.)
I use the second option. Here is my system for checking receipts against statements:
Gather the week’s receipts and the checkbook. Print up the week’s credits and debits from online. Include all bank accounts and credit cards and make sure there is no gap between last week and this, such as a debit that came through late in the day. Take the top receipt, match it to the debit on the printout and mark both the receipt and its corresponding entry with an X. When the stack is gone, a quick scan of your printouts will now reveal any irregularities or missing receipts. Research questionable charges and highlight items where the receipts are simply missing to ensure that they are recorded in your budget. An uneventful account check usually takes less than ten minutes.
The second item this month is to establish sinking funds. This is one of the things that makes budgeting all worth it. Christmas, birthdays, vacations and even less-fun things like property taxes and car repairs will no longer be sources of financial panic or reasons to go into debt. Simply take your end goal dollar amount and divide it by the number of months until the event. For instance, you know that your sister would really like a certain $50 boxed set of dvds for Christmas, you have 5 months to save if you want to buy it Black Friday/Cyber Monday weekend, so you simply set aside $10 per month in your budget until then. If you are not sure how much money you will need, just estimate and adjust as you get a better idea of the actual costs. For things like repairs, you can save until you hit a certain dollar amount, or turn it into a multi-purpose fund. We once had a car repair fund turn into a new car fund! You can set up an actual savings account with your bank specifically for these amounts, or simply keep track of them in your personal accounting, whatever works best for you. I can tell you from experience how nice it is heading into special events with money to spend, or looking at a well-padded repair fund.