Andrew
While keeping tabs on your personal financial health should never be neglected, the end of the year is the perfect time to review your budget, investment portfolio and any recent financial decisions to ensure you are on track to meet goals and to determine if adjustments are needed. Such a review needs to be thorough if you are to spot any weaknesses and build on strengths.
From checking your spending to reviewing your credit report, it is important to ensure you have covered every base when carrying out an annual personal finance review. Below, six Forbes Finance Council experts share important financial factors everyone should review at the end of the year.
- Analyse where your money went
Every consumer should check where they spent their money during the year—was there a savings goal, and was it met? Understanding the inflow and outflow of cash will help you review lessons learned. Not reviewing your cash flow is not being honest with yourself, and you will not be able to see if you can do better next year — you may be able to save more, and you may see that part of your spending in the last year was unnecessary. — Nike Ajao, Spitfire Strategies
- See if you spent more than you made
Start by getting real with your finances. One question you can ask yourself is: Did I spend more money than I made this year? If the answer is “yes”, there may be a potential debt problem on hand.
Do not worry, though; there are many simple fixes if you start the next year on track! Use a spreadsheet to make sense of your numbers so you can break down and tweak your expenses versus your salary. — Will Murphy, Everlasting Capital
- Review your budget versus spending
First, whether it is for professional or personal reasons, checking your budget spending is crucial to sustainability. It is important to understand if you are overspending or underspending, as that will help you with cash and savings management for the upcoming year. Second, when monitoring one’s debt and savings levels, ask yourself if they are manageable and within reasonable ratios. — Bilal Surahyo, Sleep Country
- Review your credit report
It is important to review the information contained in your credit report and verify that it is accurate.
While an incorrect balance or missed payment can negatively affect your score, an unknown credit inquiry or open account could be the first sign of identity theft. Consumers are entitled to a free credit report annually at annualcreditreport.com. — James Garvey, Self Financial, Inc.
- Check recurring expenses for increases
What is causing the most stress on your income or expense budget can vary from year to year. One area to check during a high-inflation year is your consistent yearly expenses and any cost increases that have occurred without a corresponding growth in your consumption. Reviewing consistent lifestyle costs against increases will let you know what kind of room you have to build a buffer to offset unexpected events. — Matt Dixon, TruNorth Advisors
- Cut out unnecessary expenses
Look over your annual budget and cut out expenses that you might not necessarily need, especially anything that recurs on a monthly or yearly basis. Weeding out excessive expenditures from your budget will help ensure you have more spending cash for the new year and possibly more money to set aside for a rainy-day fund. – Ben Jen, Ben Jen Holdings SLLC
Bongani Ndlovu
Online Reporter