Financial housekeeping: a checklist

I’m one of those people who’s hopeless at housework. If I were in charge of my  home’s cleanliness and organization, it would be a painful process. Thankfully I have family members who have a much better handle on it; they seem to have mental checklists that keep everything moving like clockwork: dishes, laundry, tidying, organizing. I contribute some, but I definitely don’t have a routine in place, and that’s such an important part of keeping a household in order.

A household’s financial life is like another home, one that needs to be kept clean and organized. And like housework, if you let one part of it slip for too long, it’ll get out of control and will take much more effort to fix than if you tackled it periodically.

This household, our financial one, is the one I’m in charge of. And I run a tight ship! I probably (OK, definitely) go too far; the scare we had six or seven years ago seems to have permanently affected me, and now I’m overly scrupulous about neatening every little corner of our financial home. But, I enjoy it, and it has helped us make great strides toward financial security. And really, I’m glad I enjoy it. If I liked doing actual housework this much, our condo would be immaculate!

If I were in charge of keeping our real home clean and organized, I’d have to work harder to create schedules and habits that helped me remember all the elements of upkeep. In the past, I’ve turned to checklists in magazines and online to help me figure out what needs doing around the house to make it nice. Financial housekeeping is second nature to me by now. But I realize it’s not so for everyone, so I thought I’d try and come up with a checklist of the parts of financial life that need to be tended to periodically.

  • Balance your checkbook. This one is like doing dishes: It needs to happen frequently or your life will get out of control fast. I don’t keep a traditional checkbook, with records of past purchases; my version is a “future checkbook” spreadsheet that looks forward a month or two. The checking account balance at the top must be current, the bottom line must come out evenly, and the balance after each predicted expense must stay in the black. That’s how I know we’re on track.

I check our bank account usually once a day; I don’t need to, but at this point it’s a comfortable habit. I sometimes let it go for a few days if I’m busy, on vacation or sure nothing’s going to come in or go out during that time. If you keep a small cushion in your checking account or are watching every dollar for another reason, you may want to get in the habit of checking your account online every day or a few times a week. If everything is pretty much in balance and you don’t feel the need to track that precisely, once a week or a couple times a month should do it.

  • Pay your bills. There are a number of ways you can do this, from writing and mailing checks to automatic debit from your checking account. The only constants are that you need to pay on time, and you need to confirm the payment went through.

Having a “future checkbook” like my spreadsheet is immensely helpful in this regard because whether it’s a bill I have to manually set up or whether it will come out of our checking account automatically and just needs to be verified, my spreadsheet reminds me when it’s due so I can take whichever actions are needed for that bill.

  • Check your debt accounts. It’s important to make sure you’re current on your debt payments and not incurring any punitive fees for underpaying or paying late. It’s equally essential (though sometimes painful) to know how much debt you have, how much interest you pay on it and how long it will take you to pay it off.

I used to go through periods where I’d obsessively look at my credit card, mortgage and student loan statements and other times where I’d ignore them completely, hoping they’d eventually go away if I didn’t pay them any mind. I find a balanced approach is better. I check my debts after I’ve made a payment, whether it’s a scheduled minimum bill or an extra payment to principal. I also keep a running list of my debt amounts so that I can feel motivated to see the total balance go down each month.

  • Check your asset accounts. It’s nearly as important to regularly check your savings, 401(k) and other holdings. Even if you don’t actively track their growth rate, you can make sure you’re not forgetting to add to these accounts, and periodically checking for fees and other costs isn’t a bad idea either. (It also ensures you don’t forget about any accounts; it boggles my mind that there are billions of dollars’ worth of abandoned accounts and other unclaimed property in the U.S.)

I check all our assets at least once a month. To remind myself to do it, I have a monthly task where I evaluate our net worth by adding up all our assets, subtracting all our debt, and comparing the remainder with the previous month. This assures me that our net worth is growing overall.

  • Revisit your big picture and your goals. Just as you sometimes step back from the day-to-day of housekeeping and realize that your living-room rug is getting frayed and dingy, or even that your home is no longer serving your needs and it may be time to start looking for a new home, it’s important to pause every once in a while and take a long view of your  financial house. There are many issues, small and enormous, that don’t get dealt with in your everyday money management but need to be addressed periodically. Are you paying any monthly bills that can be eliminated? Are your debts growing or shrinking? Do you have a plan to get debt-free? Are you setting aside money for big future purchases, such as a dream vacation or a replacement car? Are you saving enough for retirement? Do you have an emergency fund and a contingency plan in case you lose your job? Will your loved ones be OK financially if you die suddenly?

I don’t have any strict advice about how frequently you should do any of the above; for myself, I go with my gut, and if I feel like I haven’t touched on an aspect of my financial life for a while, or don’t know exactly where I am in some area, or formulate an ambitious new goal, I look into it. If I had to describe my financial behavior, it would go something like this:

Access checking account and balance my future checkbook daily, or nearly every day.

Check my credit card accounts when I know a purchase has been made. Pay off my credit cards twice a month, on payday.

Check my debt accounts every time a payment is sent, and update overall debt total.

Check my asset accounts once a month, and add them up for a net-worth snapshot.

Make small goals at the beginning of the month and track them throughout; make big goals at the beginning of the year and track them too. Sum up my progress at the end of each month and each year.

Re-evaluate my budget whenever a fixed expense grows or shrinks, or whenever regular income increases or decreases. If there’s more money available, decide where I’m going to put it. If there’s less money to go around, figure out what to cut.

Hold family meetings whenever there’s a big change coming, or a large-scale plan or important decision to be made.

How about you? Do you have an organized method for financial housekeeping? If not, I hope my list has given you a starting point.


Image courtesy of artur84 /

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