As the year slowly creeps into its final months, it is a good idea to conduct a financial check-up to help you with your finances. For one, it can give you a better understanding of where you are exactly with your finances. It is important that you always have an idea where you stand financially because it helps you make informed decisions.
One other benefit of looking over your finances is it helps you identify areas you can improve on. Mistakes are part of life and you will go through a couple of them in your lifetime. You will make mistakes and errors in judgment when you start to manage your finances. The idea is to catch these mistakes as early as possible to mitigate its effects on your finances.
This is one of the biggest reasons why you need to conduct regular financial check-up. You need to sit down and go through your finances to make sure you are not overlooking an area that needs some correction. You might have forgotten about a recurring subscription you made at the start of the year. There might be a bank account that has remained dormant and losing money in fees and bank charges.
As the holidays draw near, it would be a good idea to look at your finances to see how prepared you are for it. There are a lot of people who fall into so much debt during the holiday season. They believe that it is acceptable to splurge since so they can end the year on a high note. The problem with this is that they start the new year in debt. If you want to audit your personal finance before the year ends, here are a few things to look into.
Assess your current debt situation
One of the first things you need to look at when doing a financial check-up is your debt obligations. You need to make sure that you are on top of all your payments. This helps you stay in control rather than being reactive to your debt situation. Once you are in control, you can make better decisions with your finances.
You also lower the chances of overlooking any payment you should be making. If you have been missing payments on a small credit card purchase for months now, there is a good chance that it has ballooned into a big amount now. Interest, fees, as well as other charges have been accumulating all these months and you now have to pay a bigger amount.
As you assess your debt situation, you need to quickly address any problems before they get bigger. If you can pay off delinquent obligations then do so. If not, look for a debt repayment plan that can work for you. Look at debt consolidation loans and see if the program will work with your specific financial situation so you can get fix the problem areas.
What is your emergency fund level
When conducting a financial check-up, your emergency fund level should be a top concern as well. If you have started with a target amount at the start of the year, it would be a good idea to check if you are on track to reaching that goal. If you are way off your target, look for ways to get back on schedule so you end the year secured.
Now if you do not have an emergency fund to speak of, it could be high time that you start saving up for it now before the holidays. You are not alone as CNBC shares that there are about 55 million Americans who have no emergency fund. This can be a great time especially as the holidays are fast approaching and you do not want to celebrate it in debt.
At this point, you might not be able to save a lot but the idea is starting with one. There are a number of theories on how much you really need to have in reserve. There are some who are suggesting you need to have six months worth of your expenses while others say you need to save up a year’s worth of expenses. The bottomline is to assess your financial situation and work with an amount you can save up and just start saving.
Are you on course to reach your targets
When you manage your finances, you do so to reach a specific target. If you save money for the week, it can be to put more towards your credit card payment. It might even be to bring up your retirement fund or to take a trip at the end of the year. The bottomline is that financial moves and decisions should all work towards a goal.
A financial check-up should include checking how far along you are from your financial targets and goals. These can be both long and short-term goals. You might be far off from your goals but what counts is that you work towards it and not deviate from your plans. There will be challenges and detours along the way but you need to stay focused and keep your eyes on the goal.
Do you have any holiday savings set aside
There is no way around it – you need to have some form of holiday savings for the coming Christmas season. It can be for gifts to people that have made a big difference in your life this year or to simply express your love and appreciation for those people that matter in your life. You might also be looking at a number of parties as the year ends and that can do a number on your budget as well.
Doing a financial check-up as the holidays come near can include checking up on your holiday budget as well. Try to separate this from your regular budget so you do not get confused and mix one with the other. Once this happens, you might end up sacrificing some regular payments in your budget and pay interest when you choose to pay the minimum.
Much like how you put together your household budget, you can take the same approach with your holiday budget. It would be a big help if you have a previous holiday budget to work with. You can simply edit and revise that list so you do not have to work from scratch. Tally up the dollar amount you need for the holidays and start setting that amount aside.
Have you started with goals for next year
You might think its way too early to start thinking of goals for next year but it is actually a good time to do that. As you conduct some financial audit, you might want to start making a list of goals you want to reach next year. A lot of them is simply based on your efforts for this year especially if you broke down big and long term goals to manageable targets. You can either continue on current year’s target or aim to do better. Whatever you set out to do, start thinking about it as early as now. You might start to get busy as the holiday’s approaches and you wake up one day and it is already the start of the new year.
Conducting a financial check-up before the holidays helps you prepare for the pending expenses as well as prepare for the new year. Try it out so you end the year on a high note and have a great start to the new year as well.