Plan The Month, Not The Moment

We’re often reminded to live in the present, to stay in the moment… instead of living in the past or future. But when it comes to money management, that’s not great advice.

For example, the other day I logged into the portal for one of our checking accounts to follow up on an email about a deposit. I noted the balance of $4,427.14 as I clicked through.

Sounds pretty flush, right?

In reality, I knew my effective balance was about one-tenth of that amount – and sure enough, my spreadsheet confirmed it.

For nearly two decades, I’ve tracked our finances in a spreadsheet that accounts for all payments scheduled for the month ahead. So on September 1, if we have $4,000 in the account, it means nothing. Because after one credit card pays off and the mortgage clears on the 2nd, the insurance autodraft goes out on the 5th, the other credit card pays on the 10th, and so on… you get the idea.

This is about planning for the month, not the moment.

One time early in our marriage, after I’d taken over managing our bills and joint checking account, my husband asked how much we had in the account. I stumbled for a moment because I knew that the number he was asking for was meaningless – what mattered was how much we had free according to the spreadsheet that already accounted for a whole month of upcoming transactions. Over time, he came to understand that the number on the ATM receipt wasn’t real.

If you’re just starting to get a better handle on finances, you begin simply by stretching out the amount of time across which your dollars are fully planned and accounted for.

In other words, you work on knowing the effective balance you’re working with after a week or a month – not just the balance in the account at any given moment.

When you have that mastered, you widen the lens. Next comes planning across the entire year, which brings your savings account into play, and the flow of money in and out to cover irregular or unexpected expenses that punctuate the usual monthly cycle.

And after that, you stretch the timeline even further: years and decades, projecting cashflow, savings, and investments to carry you across whole seasons of life.

This is how you shift from reacting in the moment to managing the flow of your entire life, and even the next generation.

So pull up your calendar (or better yet, your cashflow spreadsheet), and chart the bills and expenses you already know are coming, and time them against the money flowing in. The amount left over after the ins and outs during that period of time is your real balance, whether you’re working with a week, two, or the whole month or year.

Because at its core, money isn’t just about numbers on a bank screen that make you feel good or bad at any given moment.

It’s about money flow over time, and how to bend that flow to support your needs.

And as you learn to manage over longer and longer stretches of time, you stop thinking so often about money and start living more on your own terms.