Lesson 2: A Map of Personal Financial Processes

Process flow chart described in the narrative on this page.
Figure 1: How the personal finance processes connects with each other

In Lesson 1: Checkbook Duh! Factors, you were introduced to the concept of lagging and future commitments. In other words, the bank doesn’t know if a check is about to be cashed or that you will need to write a check for a bill that’s about to arrive.

In this lesson, you will be introduced to multiple processes and how they relate to each other. Why introduce all the processes at once? Learning one process after the next can be a challenge if you don’t already know what’s coming.

“I don’t do well when asked to follow blindly. I don’t know, maybe you’re the same way?”

me, the creator of this series

To make my point, would you feel comfortable if someone said, “We are traveling from Virginia to California. Follow me?” I suspect that before you leave you would want to know the route, the supplies you need to bring, and the mode of transportation – in the least. 

Therefore, before we travel through the basic (and somewhat overlapping) processes, let’s review.

Get Ready

This is the process where you make a list of all your financial commitments and put them in chronological order so that you can set up the digital tracker and planner in Lesson 4: Set up the spreadsheet

Here’s a sneak peek into the topics covered in Lesson 3, Get Ready.

  • Financial commitments and due dates
  • Loan and credit card payoff balances
  • Income deposit dates
  • Savings account balance
  • Current checking account balance
  • Outstanding transactions

Set up the Spreadsheet

Whether you get paid once a month or multiple times a month, each build-a-plan process starts with the spreadsheet.

Even if you haven’t used a spreadsheet before, Lesson 4: Set Up the Spreadsheet walks you through setting up a free spreadsheet. If you are spreadsheet savvy, Lesson 4 will require a quick scan. If you are new to spreadsheets, a cost effective strategy is presented to help you get started.

Build a Plan

Build it icon
Figure 2: Assemble all the pieces

The timing of your paycheck and financial commitments can create challenges. The first step in bringing your financial management process under control is determining when your issues occur.

Start by choosing a build-a-plan lesson based on how often you get paid. Then review Lesson 5d: Front Loaded Paycheck Plan.

Each planning lesson walks you through populating the digital tracker and planner spreadsheet. The topics covered for each payment timeline plan include:

  • Enter financial commitments
  • Enter paychecks
  • Project the future
  • Make adjustments

Track Commitments

Tracking planned commitments in real time is key to understanding where you’ve been, where you are, and where you are going.

Lesson 6: Tracking Commitments, is the first step in the two-step process of balancing your checking account – a critical undertaking. It will explore the following topics.

  • Payments cleared
  • Pending payments

Balance Against the Bank

Model bank with a checkbook leaning against it.
Figure 3: Balance your digital checkbook against the bank

This is the second step in the two-step process for balancing your checking account, therefore, the topics overlap. Once you complete step one, your digital tracker balance will likely not match the bank’s. That’s okay.

The objective of this step is to do some simple math and ensure that, eventually, your tracker will match the bank and visa versa.

Lesson 7, Balancing Against the Bank, will include these topics.

  • Pending payments
  • Pending deposits
  • Simple math

Adjust for the Future

Given the nature of the digital tracker and planner, you will already have insight into the future. However, the future that you plan can be derailed due to unexpected transactions. Therefore, in this last process, you make adjustments to ensure that there will be enough money in the bank when commitments come due.

Lesson 8, Adjust for the Future, will cover the following topics.

  • Review the months to come
  • Making adjustments

Return to the process of tracking commitments and repeat the balancing against the bank process before checking your future again.

Advanced Topics

Future topics will include topics such as

Next Lesson …

It’s time to get ready with Lesson 3. Even if you have a list of your commitments ready to go, my experience working with others has shown that there are often overlooked transactions. So, please don’t skip the next lesson.

Published by Cindy McCourt

I wear many hats: author, website planner, Drupal consultant, instructional designer, trainer.

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