Money Management in 5 Minutes a Day

by Matt Bell on 21 November 2012 3 comments

Some aspects of managing money are a huge challenge. Just ask all the savers who married spenders (and vice versa)! But a lot of the day-to-day dealings with money don’t have to be so complex, especially with the many websites and electronic tools specifically designed to make managing money easier. Here's how to take the task of managing money down to five minutes a day. (See also: Managing Your Short-Term Money)

Maintain a Central Financial Operating System

A huge key to success with money is cash flow management. That means being proactive about how the money that flows into your life flows out. Knowing where it’s going is essential if you’re going to choose where it should go.

Of course, I’m talking about budgeting. If you don’t use a budget, you may need to take this on faith, but a budget is the single most powerful tool anyone can use to manage money well.

There are two major steps involved in using a budget: setting it up and managing it. The set up will take a little time; managing it takes just a couple of minutes each day.

To get started, choose a tool. In our household, we use Mint. But there are other choices as well, such as Adaptu, LearnVest, and others. Ask friends who manage money well which tool they use, open an account, link it to your bank and credit cards, and then use these Recommended Spending Guidelines to set up a plan.

I start most days by taking a quick look at our cash flow on Mint. Did the system categorize recent transactions correctly? And how does our actual spending so far this month compare with our plan?

Head to the grocery store without a clue as to how much you can afford to spend and chances are approximately 100% that you will spend too much. Glance at your month-to-date spending on groceries vs. the targeted amount you set up, and you’ll be much more intentional about how you shop.

Semi-Automate Monthly Bill Payments

Chances are good that your monthly utility bills will be accurate. That’s why we have those fully automated. We look at the bills to see if anything seems wrong, but that has happened so infrequently that we’re good with paying those bills automatically.

Others I like to review before paying, like our credit card bills. We still pay them online, but we review them first and then manually make the payment.

Batch the Manual Payments

Some people like to pay their manual bills as close to the due date as possible, so they can earn interest on their money as long as they can. However, in today’s low-rate environment, checking account “interest” has become a theoretical concept. I prefer the very real time savings that comes from paying most of our monthly manual bills in one sitting.

Automatically Prepare for Periodic Bills and Expenses

Some bills and expenses are due less frequently than monthly, like our semi-annual property tax bill and our annual life and homeowners insurance premiums. We take the total annual cost of all such bills, plus the total annual cost of all periodic big expenses like holiday gifts and vacations, divide that amount by 12, and automatically have that much transferred to savings each month. When the bill or expense comes due, we have the money on hand.

Investment Monitoring

I am not a believer in following the daily gyrations of the market. That’s a recipe for worry. Our mutual fund-based investment strategy involves monthly reading of the investment newsletter we follow, occasional trades throughout the year, once-a-year rebalancing, and a once-a-year review of whether we’re on track with our long-term goals. It’s a very straightforward strategy that requires very little time on our part.

We have accounts at more than one brokerage house, but Mint enables us to see all of our investments on one screen.

Credit Monitoring

We see no need to pay for monthly credit monitoring. Instead, I have recurring reminders in my electronic calendar to use AnnualCreditReport.com to pull the free report from Equifax every January, TransUnion every May, and Experian every September. Reviewing those reports every four months doesn’t take much time and serves as a free credit monitoring system.

Through the use of a handful of financial web sites and an electronic calendar, our day-to-day money management takes less than five minutes a day.

What about you? What other tools do you use to manage money efficiently?

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Guest's picture

Great article. We use a combination of Mint.com and Quicken. Quicken gives us control over the actual data for long term records. We log into Mint each morning to keep abreast of any changes and to be alert for fraud. When a bill does come in, we scan it and set up the bill pay right then. The hard copy is shredded and trashed. This has kept all of our records digitally stored and easily accessible.

Guest's picture

I usually do the budgeting manually, although its really tempting to go beyond the budget I think tools such as the one that you used will be a big help on my part. I will definitely check it out.

Guest's picture

The Credit Monitoring Tip was very timely. I was considering paying for credit monitoring.