Well, I guess you can say I am officially a creature of habit. For over 20 years now, I have been segregating my household recurring expenses in a separate money market account. Additionally. I have been using the same Microsoft Excel workbook to record the activity and reconcile the account balance.
My Workbook from 2018
Some Additional Recurring Items Over The Years
This account still holds my big ticket recurring expenses that I only pay once or twice a year. Over the years, I have added items for auto, home, and umbrella insurance. In 1999, our house was uncomfortable in the winter time with just a heat pump. So without access to natural gas, we added a back-up oil heating system. Each summer, I pre-purchase all of my heating oil and a purchase a maintenance plan on the boiler, for the upcoming winter. In 2010, I started putting $500 a month aside to cover clothing and other necessities we were putting on our Visa card. Lastly, I added an interest income column to allow me to account for it in my monthly reconciliation.
Reconcile The Inflow And Outflow For The Account
As you can see above, on the “+” rows, I now deposit $1,800 plus interest into this account to cover my recurring expenses. Most items are paid just once or twice a year with the exception of the Visa column, which I transfer monthly to my personal checking account, to pay off the card each month. For car insurance, 2018 was a transition year. My son was graduating with his masters degree in December of 2018, and he wanted to start building his credit score. So we transferred his car into his name, and I paid his insurance for the balance of 2018. Now that he is on his own, he pays the policy, so that column is no longer necessary in 2019. As December shows, I am back to paying my car insurance just twice a year.
Reconcile The Month-End Bank Balance To The Workbook
The circled amount in column B represents my monthly ending balance in my money market account. I tie this amount to the tracker at the beginning of the next month. Reading across the row for the circled amounts represents how much I have set aside for each item listed in the columns.
It Only Takes 15 Minutes a Month To Reconcile My Account
Since I deposit the same amount each month and the payments for each item are infrequent it takes me less than 15 minutes of my time to reconcile the tracker each month.
Your Reconciliation Process Should Be Easy Too
Once you set up you own recurring expenses account and start paying the expenses once or twice a year, you should will be able to reconcile your month-end balances quickly at the beginning of the next month just as I do.
Leave a Reply