Your Wealth Check-In: Assessing Your Finances Before the New Year
Year’s end is the perfect time to step back and assess your financial health. A fiscal checkup can foster a better understanding of your own financial standing while highlighting any necessary adjustments needed ahead of the upcoming year. Whether your last year was successful, or one filled with challenges, conducting a check-in can help set realistic goals and a solid plan for the future. See the tips below to help get you going towards reaching your goals!
Understanding the Importance of a Year-End Financial Checkup
Think of your financial checkup as a financial reality check, an opportunity to evaluate your financial goals and see if you’re on track to achieve them. It's a chance to get real about saving, budgeting, and how much dough you actually spent on Chai Lattes from your local trendy café. The best part? You’ll be in the driver’s seat.
Not only does a year-end checkup help us understand our current financial standing but it also provides an opportunity to identify any potential issues or gaps in our financial plans overall. Maybe we need to better align our budget to new goals. Buying a house soon? It may be time to cut out the annual getaway to the all-inclusive resort in the Florida Keys. Maybe we've been neglecting our retirement savings and need to make it a priority moving forward. The list goes on. A checkup can highlight these necessary adjustments or course corrections. Remember, just because you haven’t yet doesn’t mean it is too late to start. Whether it’s saving for retirement, or paying off debt, now is a great starting point!
Establishing attainable financial goals and applying them to your budget can lay the foundation for achieving them. So, as we approach the end of the year, let's take the time to conduct a personal year-end financial checkup, and the best way to start is by conducting a personal financial audit.
Step-by-step Guide to Conduct Your Personal Financial Audit
Although everyone’s finances are unique in many ways, the following step-by-step guide may help as you conduct your own personal financial audit. Remember to give yourself the gift of tough love.
Step 1: Gather Your Financial Documents
Start by gathering all your financial documents including bank statements, credit card statements, investment statements, and any other relevant documents. The goal is to build a complete picture of your financial situation. Don’t fret if you don’t have these documents neatly tucked away in a locked filing cabinet. Wrangling up your online banking and credit card apps will suffice here too.
Step 2: Review Your Income and Expenses
Identify any trends or patterns that may be impacting your financial health. Think of unnecessary spending on eating out, overuse of credit cards, deferring loans, and keeping that unused gym membership. Take a hard look and try to spot areas where you can cut back on expenses or increase your total income.
Step 3: Assess Your Debt
We know in today’s reality, it’s normal to have pesky student and medical loans hanging around. Calculate your total outstanding debt and determine if there are any high-interest debts that need to be prioritized for repayment. You may even consider consolidating your debt or negotiating lower interest rates to save money. You are your own best advocate!
Step 4: Evaluate Your Investments
Ask yourself if there are any investments that underperformed this year? And consider alternatives that may prove more fruitful. Remember to always keep your financial goals front and center even if that means letting go of investments you once had faith in.
Step 5: Update Your Budget and Financial Plan
Identify areas where you can save money and allocate your income accordingly. Consider automating your savings and investments to stay on track, and separate line items between needs and luxuries.
Step 6: Set Goals for the Upcoming Year
Whether it's saving for a down payment on a house or paying off a credit card, setting specific goals will help you stay focused and hold yourself accountable.
Updating Your Financial Goals for the Upcoming Year
We know a financial audit can be a tedious task. Put on some music, break out your best colored pens, and make the best of the process because knowledge of your situation will give you the power to reach your goals! A great first step might be to take a look at the goals you set last year and evaluate what progress was made. Did you achieve everything you set out to do? Were there any unforeseen circumstances that impacted your ability to reach your goals? Take these factors into consideration as you update your financial goals for the upcoming year.
Take a holistic approach and consider all aspects of your financial life. Do you want to Pay off a debt? Save for a big purchase? Start or contribute more to your retirement account? Open your dream bakery? Each goal should be specific, measurable, and have a timeline attached to it.
Once you've determined your goals, break them down into actionable steps. What do you need to do on a monthly, weekly, or daily basis to achieve these goals? This will help you remain accountable and on track throughout the year.
Your financial goals may change over time, maybe your dreams of owning a bakery have died, and that's okay. Life is full of unexpected twists and turns, and it's important to be flexible and adapt as needed. Don’t let a small change derail what you’ve worked so hard for. Check in throughout the year to assess your progress and make any adjustments when necessary.
Set Yourself Up for Financial Success
By taking the time to conduct a year-end financial checkup, following our step-by-step audit guide, and updating your financial goals, you have set yourself up for success in 2024!
Financial success is a journey. F&M understands the ups and downs that you must go through on your financial journey and we’re here to help! Once you set your 2024 savings goals, use our savings goal calculator to decide which of our savings accounts makes the most sense for you and your family. Cheers to a prosperous new year!
