Taming The Checking Account

We’re at the beginning of another new month. Do you know your checking balance 30 days from now?

For nearly two decades, I’ve projected and tracked our checking accounts 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 the mortgage clears on the 2nd, the insurance autodraft goes out on the 5th, the credit cards pay on the 10th and 24th, and so on… you get the idea.

The account total that matters is the one that remains after all obligations for the month have been met, not the one that shows up in my bank app at any given moment.

Because that momentary balance doesn’t account for how much of our income is already spoken for.

And for most of us, those preset obligations are rather considerable because it’s all our major bills – housing, childcare, utilities, insurance, etc.

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 at that time. 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 trying to get a better handle on finances without monitoring your account balance constantly, you must begin by stretching out the amount of time you’re accounting for. Don’t manage money day by day, or week by week, or even paycheck by paycheck.

Work on knowing the effective balance you’re working with after an entire month of obligations are met – because that’s the time unit on which 90% of our bills operate.

This is how you avoid late payments and overdraft fees. You can learn more about the cashflow spreadsheet I use to chart out each month here.

When you’ve mastered that, you widen the lens further. 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, instead, managing the 5,000-foot view over your entire life, and even the next generation.

Because at its core, money management 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 learning how to bend that flow to support your needs.

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.