Question: How often should I think about my money?
Advice from the Lab: Use the 3Rs: Revise yearly, Review monthly, and use Rules (of thumb) daily.
It’s tough to strike the right balance between making sure that you are using your money wisely and enjoying your money at the same time. There is no correct answer to how often you should think about your money, but we suggest employing the 3Rs: Revise Yearly, Review Monthly, and use Rules (of Thumb) daily.
- Revise: Once a year, revise your general financial strategy. We recommend going into this with a good glass of wine in hand to make the process less daunting. To do this, sit down once a year and map out your general financial situation. You don’t need to make a 50 category budget with labels and average spending numbers. Just figure out how about how much you spend on the basics (rents, bills, groceries) and how much you can save. Try following this flowchart to determine what your next financial goal should be. Once you have the numbers sorted out, automate as much of the process as possible. Turn on autopay for your credit cards, bills, and savings accounts. That should keep you on track month to month. If you follow our recommendation and automate these transfers, then you should be all set. You are free to spend anything you have left over on the things you like.
- Review: Once a month, review your accounts to make sure that there are no problems. Example: Use apps like Mint or Clarity and just check in once a month to make sure all your accounts are current and your bills are paid.
- Rule: Pick one rule to reduce expenses that you will follow every day. Examples: “I won’t spend more than $10 on lunch,” or “Only take an Uber if it is going to save me half the time it would take to walk; if that’s not the case, just bike, walk or take public transit.”