Review your finances now to improve next year

Past Financial Year PDF

As the year comes to a close, it's an ideal opportunity to look back on the past twelve months and assess your financial situation. Taking stock of your finances helps you stay aligned with your goals and make better decisions moving forward. This review can highlight what you need to change and where you have had the most success. Surprisingly, many people skip this important step and end up missing chances to improve their finances from year to year.

Where should we start with this financial review?
Calculate Your Income: Start by calculating your total income from all sources. This includes your salary, interest from savings accounts, dividends from investments, and any other sources of income.
Analyze Your Spending Habits: Look at your spending patterns to see if there are any habits that need to be changed. This can help you make better financial decisions in the future.

Are there other important areas that can provide insights on a person’s financial situation?
Assess Your Debt: Take stock of all your debts, including credit card balances, loans, and mortgages. Understanding your debt situation is crucial for managing your finances effectively.
Evaluate Your Existing Savings: Review your savings accounts, retirement funds, and any other savings you have. This will help you determine if you are saving enough for your future goals.
Calculate Your Net Worth: Your net worth is the difference between your assets and liabilities. This will give you a clear picture of your financial health.

What should we do with this information from our review?
Identify Financial Strengths and Weaknesses: Identify areas where you are doing well and areas that need improvement. This will help you focus on the right areas to improve your financial situation.
Set Realistic Financial Goals: Based on your analysis, set realistic financial goals for the future. This will give you a clear direction and help you stay motivated.

How can we make sure we are doing better next year as the year progresses?
Create Personal Financial Statements: Personal financial statements, such as a personal cash flow statement and a personal balance sheet, can help you with budget planning and setting goals for increasing your net worth.
Review your Budget: Regularly reviewing your budget can help you stay on track with your financial goals and adjust as needed.
Check on Goal Progress: Reviewing your goals monthly or even quarterly can help you identify when a course correction is needed and ensure you have time to still achieve your goals.