Guide to Your End-of-Year Personal Financial Review

With the year coming to an end, it’s important to review your personal finances, to see if you’ve made progress on your plans this year.

6 steps to start on your personal financial plan

Are you closer to your goals? How do you tell if you’ve made any financial progress? Without conducting your own personal financial review, it’s difficult to tell where all that money has gone.

The purpose of going through a personal financial review is to keep track of the progress of your financial goals, review the debts that you have managed to clear, the amount of money you have saved, and the income you have earned.

Here’s how you can get started, in 6 easy steps.

1. Spot spending patterns in your finances

During your annual review, take note of the categories your expenses fall under. Scrutinise the way you’ve spent your money and ask yourself if you’re satisfied with how you’ve used it.

Be honest with yourself and identify the expenses you’ve regretted — this can help you make wiser money decisions in the future.

For the upcoming year, use this information to readjust your spending plan. Take this chance to eliminate unnecessary spending, including unread magazine subscriptions, under-utilised memberships, and so on. You’ll be surprised by how these things add up.

2. Keep track of the progress of your financial goals 

Did you make any financial goals for the year? If you did, this is the perfect time to assess what you’ve achieved. Perhaps you’ve wanted to set aside money for a family vacation, repay your credit card debts, or have extra emergency funds in your account. Congratulations if you’ve managed to hit your financial goals, but if you haven’t, there’s always next year.

Take a step in the right direction by planning ahead and setting your financial goals for the year 2021. Need extra help? Download the Planner Bee app and make use of the smart goal-tracking capabilities to track your expenses and figure out if your savings and investments are in line with your goals.

3. Review insurance policies

You may have purchased insurance policies two years ago — avoid the mistake of thinking that you’re sufficiently covered. In fact, you should review your policies every quarter. If you have a financial advisor, leverage on their expertise and check in with them for sound advice.

However, if you intend to do this review on your own, determine if anything has changed recently and might require increased coverage.

Step 1

Ask yourself if your existing insurance plan covers all your current expenses, or if there are any additional upcoming expenses you’re expecting.

Step 2

Check the amount you’re paying for your policies. Are your current policies still active? Have you paid this year’s premiums? Do you want to enjoy some cost savings by opting for an annual payment for your policies, rather than a monthly payment basis?

4. Review accounts 

Create your own personal financial inventory to get a better snapshot of your financial health. This self-check should include:

  • Your existing assets, including your savings account, investments, emergency fund, real estate equity, retirement accounts, education savings etc

  • A list of debts incurred, including your mortgage, car loans, student loans, credit cards and others

Reviewing your accounts will give you a better understanding of where your money is flowing in and out of.

5. Assess your investments 

Keep an eye on your investments and keep track of the progress of your investments, and whether any action is needed. Decide how aggressive or conservative you want to be with your investments, since these decisions can affect your long- and short-term investments.

Read more: Creating Your Investment Strategy: Short-term or Long Run?

If you’ve hit your financial targets, determine if it is time to liquidate your investments. If your existing investment is generating good returns, consider if you should deploy more funds.

If your investments are not doing well, perhaps you should rebalance your investment portfolio.

6. Re-evaluate money goals with the SMART method

Keep in mind where you are financially, and what you hope to accomplish in the next year.  Set new goals to help you achieve what you want, and the goal should be an attainable one that is SMART.  Use this guide to help you re-evaluate your money goals:

Specific – Be specific about your end goal; e.g. plan to save for your new BTO’s downpayment.

Measurable – Use metrics or data to monitor your progress by setting milestones along the way; e.g. 10 months to save $10,000 for your BTO’s downpayment.

Achievable – Think about how to achieve this goal and whether you have the proper tools, resources or skills to get there; e.g. I will hit my $10,000 goal by saving $1,000 a month.

Realistic – Set a goal that is feasible based on your current situation. If you’re making $3,000 a month but aim to save $200,000 in 5 months, that goal would be impractical and you will only be setting yourself up for failure. Instead, motivate yourself by having sensible goals; e.g. I can terminate my magazine subscription and monthly shopping sprees to help me save an extra $300 every month.

Time-based – Having a deadline is important. It helps to create a sense or urgency and defines your progression; e.g. by setting aside an extra $300, I only have to save $700 a month over 10 months to hit my goal of $10,000.

There’s nothing that can stop you from achieving your goals. Start saving towards your financial future today! Once you’ve completed the above steps, you will be armed with greater financial knowledge and be more financially savvy in the next year.

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