How to Conduct a Personal Finance Review

Have you ever carried out a full review of your personal finances? It is likely that you have not. Most people only take the time to review their finances when things are not adding up, or when they are in a panic that things could be going wrong with their financial management. One must take their finances very seriously, and one of the ways to do those is to carry out a personal finance review at least once a year. By doing so, you will find that there are ways that you can easily identify where you can improve on your finances, especially when it comes to taking care of your health as well as elevating your overall productivity. With a review, you will look at two main things from the previous year, which are what worked, and what did not work.


Determining What Worked

Your actions are what determine the way that your finances are over the period of the year. So in the what worked section, you need to take some time to discover what your accomplishments have been for the year. These could include finishing paying off a student loan after years, or elevating your health and running a marathon. It could also be that you were able to supplement your income. By looking at this list, you will begin to see which months that you were able to accomplish something worthwhile, and where there is room for improvement. You may even be taken aback by the amount that you have managed to achieve within the year. Use your what went well list to plan for a better year to come.


Determining What Did Not Work

Here you need to look at some of the goals that you had set, and see whether you had managed to accomplish these goals or note. For those goals that you did not meet, you need to make an assessment of why you were unable to achieve them. By doing so, you may find that there are some circumstances that you need to overcome, or some area where you are falling short. Set a strike rate for your success against your goals so that you can improve on what did not work in the previous year. For example, your goals could be at 100%, though you will be satisfied if you meet them at 70%.


Planning for the Year Ahead

You need the historical information from your review to plan for the year ahead. When doing so, you should begin by creating categories for your financing (such as travel, business, health, saving etc.). Then ensure that within each category, you have something in place to measure the results that you achieve. For example, in the health category, you may want to lose 15 pounds by getting a monthly gym membership for six months. You may also choose to explore a vegan diet which will bring down your grocery bill. Every decision that you make will in some way impact your finances.

Therefore, in your personal finance review look at the income that you are likely to receive, and the avenues from which you will receive it. Set goals for each avenue, such as working towards a promotion or building your personal business. You also need to have some money aside for your savings, and you can save for something like retirement that is long term, or something shorter term like purchasing a new appliance. These should form part of your review. Finally, decide how much you want to give away in gifts for the period of the year. Having this well outlined will prevent you from overspending.