How to Review Your Finances for the New Year | In In Financial Tips | By By admincashalo

With 2019 peeking just around the corner, it’s nice to put yourself under a quick financial check-up to see where you stand before the year formally wraps up. Apart from observing a healthy lifestyle, do place “be financially healthy” up on your list of new year’s resolutions.

Avoid making the same money blunders and build a stronger foundation toward reaching your financial goals. Here’s a guide to help you take control of your finances and get on the right track for the incoming year.

Check your balance and savings

The first step to responsible financial management is understanding where your balance stands. How much money do you have left in your bank accounts? How much debt do you still have to settle with credit card companies, financial institutions, friends, or family members?

This can be daunting especially if you’re aware of your misspending and how much you owe. But knowing how much money you have left gives you a sense of urgency in developing better habits and adjusting your expenses.

Do you have enough money saved up for rainy days? Were you able to reach your target savings this year?

Leave your savings where they currently are. If you weren’t able to reach your goal for 2018, it’s time to re-evaluate and plan for a more realistic approach that will help you achieve at least 50% of your target by mid-year. If you wish to save ₱30,000 by year’s end, your monthly savings plan would be ₱2,500. If you’re unable to reach half of your annual goal by mid-year, make sure that you increase your monthly savings to catch up.

Calculate your income

Determining how much money regularly flows into your account is vital to getting a good grasp of your financial situation. Is your monthly income enough to cover for your fixed expenses and support your family (if any), while setting aside for your savings?

You should consider the foreseeable additional increase in price of goods to plan and accommodate your expenses. If you think your monthly pay is no longer enough to get you through next year, you may want to look for additional sources of income. Either you have to change your lifestyle and or you start looking for part-time work to support your needs.

Review your expenses

Once you’ve calculated how much money is coming in regularly each month, you now need to plan how and where to allocate your cash wisely. This should help you map out your fixed expenses, debt, savings, and daily allowance. It will also show you how much you spend on unnecessary costs, so you can adjust your spending habits accordingly.

Checking your bank statement shows you the things you purchased with your debit or credit card. This should also tell you how often and how much damage your impulse purchases have affected your financial health.

The figures will give you an accurate analysis of how to set up a more realistic budget system. It can be hard to look at, but the harsh truth will encourage you to be sterner with your spending.

Compute your debts

Knowing how much debt you have encourages you to spend within your limits. For your pending loans and debts to pay off, see if you can request to reduce the interest rates for faster repayment. It wouldn’t hurt to try, so better make that call as soon as you can.

Think of different repayment strategies to keep you from going on a debt cycle. Credit card interest rates are usually high. If you’re only meeting the minimum monthly payment, that means you’ll be paying for higher interest rates for a long time. Pay for more than the minimum to keep the debt from piling up, and cut down your overall balance.

As important as it is to leave your savings where they are, if you’re in terrible debt, might as well use a portion of it to repay your outstanding debt or loans. This should save you in the long run as it eliminates additional fees and high-interest rates in the picture.

Check the performance of your investments

Did you experience gains or losses this year? If you’ve been losing more than you’re gaining, then you’re not monitoring it enough or putting your money in the right places.

Review your investments’ performance and keep tabs on the mid-year report. How did your initial allocation targets perform? Here, you’ll see if they’re going the direction you want or not. This should give you a heads-up if you need to diversify for better gains.

Note that you should invest based on your financial goals. If you wish to grow your retirement fund or build a college fund for your kid, better look at long-term investments like bonds or unit trust funds. Meanwhile, short-term investments such as stocks, are ideal if you’re saving up for your first home in five years’ time.

Periodically checking your financial health is essential to achieving your goals. It reminds you of your financial plans and keeps you on track.