Hold Monthly Budget Planning Meetings

It may not sound fun, romantic, or exciting, but I’ve got to admit that I really look forward to our monthly budget planning meeting.  We treat it like a date!  The kids are in bed and we’re together focused on the same thing.  We’re on the same team working to achieve our goals.  Seeing our progress, reaffirming our goals, and making sure we’re on the same page is motivating and fun!`

Before I lay out the way we do our monthly budgeting meetings, I want to be clear that there is no one right way to do your budget planning meetings.  The important part is that you are doing it!

We have ours monthly, but you might want to do them more often (I think they should be at least monthly.)  You are checking in and holding yourself accountable.  You’re tweaking, making improvements, and celebrating progress.  The details and agenda will vary from couple to couple.

Reconcile (10 minutes – many minutes)

Before we assess our progress on our goals, we have to make sure all of our numbers are right.  We want to make sure that the amounts in our bank accounts (transactions and totals) perfectly mirror the transactions we’ve logged in YNAB throughout the month.  Reconciling with two people is pretty convenient (though it’s totally doable on your own too).

I’m usually at the desktop computer with YNAB open and Mike is on his laptop with each of our accounts open.  We go through our checking account, and each of our credit cards with Mike reading off all the transactions and me marking them as cleared in YNAB.  Then we compare our totals.  It’s really fun when the numbers match up just right and we can reconcile immediately.  Sometimes we’ll find that we forgot to enter a transaction or there’s one that’s entered twice, or we transposed some numbers or something and it requires a little detective work before the account reconciles.  It’s probably nerdy to admit that it’s fun either way, so I won’t.

Reconciling can be as quick as five minutes if we faithfully entered all our transactions during the month. If we got behind or made a mistake, (and there’s usually at least one) it will take longer. If you’ve failed to log any transactions during the month, this is when you pay the price. Next month you’ll have good motivation to do better.

Pay Bills (5 minutes)

While Mike is in each of our credit card accounts, he pays the bill.  One of my favorite parts of using YNAB is that we don’t have to worry if there is enough money in the checking account to cover the credit card bills because when we “spent” the money from our categories it stayed in the bank just waiting for the bill to come.

Two of our credit cards earn points that we redeem for “cash” or statement credits.  They don’t have a certain threshold that has to be reached in order to use them, so we apply them each month before paying the card.  Since we have all the money on hand to pay our credit cards each month, the cash back goes straight to our debt payment!  For those curious how we work that in YNAB, we enter the cash back as income for that month (instead of the next month, which we do for all of our other income), then it’s funneled into our “end of the month payment” category.

For those who are new to YNAB, remember to record your money transfers (e.g. paying your credit card bill from your checking account) so that YNAB shows the money leaving your checking account (outflow) and entering your credit card account (inflow).  When you make that single transfer it will show up both under your checking account and your credit card.

Re-Distribute (5 minutes)

After we make sure our accounts match YNAB and pay our bills, we go through and move any extra money from all the categories that aren’t accumulating money for future expenses to our “end of the month debt payment” category. The final result of that is that we’ve given a job to every dollar in our budget for the month. Nothing is floating around–it’s all directed at the goals we decided on.

Make Our End-of-Month Debt Payment (2 minutes)

When everything is re-distributed we pay the remaining lump toward our debt (our end-of-the-month debt payment)!  It might be big or small, depending on how the month went, but it’s always worth celebrating!

Budget and Goals for Next Month (10 minutes)

Since we are living on last month’s income, we can now budget (allocate money to our budget categories) for the entire next month.  If you aren’t to that point yet, you’ll just fund your categories each time you get paid.

It’s absolutely essential to actually think about our budget for the next month. We talk about what non-standard expenses we might have over the next month. Most of our budget categories start with the same amount each month, but there are always a few that we know will be different from the month before.

Maybe we know we’re going to have to replace tires on a car and we need to adjust our “car maintenance” category so there will be enough there. Or maybe we know that one of the kids will be starting a sport at school and we need to increase our “kid’s activities” category.  Or we could be planning  a trip and need to increase the amount in our “fuel” category. If we know our expenses in a category will be different from usual, we go ahead and adjust the amount budgeted to that category. That flexibility keeps our budget in line with our reality. Remember, when we budget, we’re directing our money toward our prioritized expenses and our financial goals. Our budget doesn’t tell us what to do–it’s how we tell our money what we want it to do for us that month.

Make Our Beginning-of-Month Debt Payment (2 minutes)

When we have set the estimated total for each of our budget categories, we’ll usually have some amount left over still unbudgeted.  We decide how much of that should go to our beginning-of-the-month debt payment, and pay it right then.  We usually make it a pretty good chunk of what we have remaining unbudgeted.  We tentatively leave the rest in our end-of-the-month debt payment category, which gives us some flexibility for unexpected expenses.

Celebrate! (5-10 minutes)

We review our goals, have a celebratory treat, and get pumped to spend as little as possible so that we can put more toward our debt at the end of the month!

A Few Key Points to Remember

• Couples, remember that you’re on the same team!  Work together.  Build each other up.  Don’t point fingers of blame. Sometimes one or both of you will have fallen off the wagon. It happens. It’s not the end of the world. Just pick each other up and keep moving forward from where you are now.
• Make it fun!  Seeing your progress and working to stay on track is a positive thing.  And if just having your budgeting meeting isn’t exciting enough, pull out a carton of ice cream and two spoons. That always works for us!
• Focus on your progress!  In order for budgeting meetings to be sustainable, they need to be positive.  Of course you will see areas that need improvement, but don’t dwell on your shortcomings. You’ve made actual, real progress to improve your financial situation this month! Take a few minutes and savor the feeling.
• Get excited about your goals! Dream together about how awesome it will be when you’ve completed your goals. I always come away from our monthly meetings with renewed hope and motivation.

Challenge—Day 26

Set a date, time, and place for your next budget meeting.  Let your spouse know that there will be refreshments served, so it’s an event he or she won’t want to miss!  If you aren’t meeting with a spouse or partner, this is a great way to check in with your accountability buddy and celebrate together.

• Do you have regular (monthly, weekly) budgeting meetings?  Do you dread them or look forward to them?