Tuesday Jan 03, 2023
Start Your Year Right With A Personal Money Review - Money Tip Tuesday
At the end of every year, and the beginning of a new one, we often feel an energy for new resolve. We look back and reflect on the things we accomplished and the things we hope to achieve in the new year.
If there’s anything you should consider starting fresh in the new year, it’s a revised look at your money. And that can’t be achieved without completing a personal money review.
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Transcript:
At the end of every year, and the beginning of a new one, we often feel an energy for new resolve. We look back and reflect on the things we accomplished and the things we hope to achieve in the new year. If there’s anything you should consider starting fresh in the new year, it’s a revised look at your money. And that can’t be achieved without completing a Personal Money Review.
Welcome to Money Tip Tuesday from the Making Money Personal podcast.
Sometimes looking back is the way to see forward. Albert Einstein is attributed to saying if you want to know the future, look at the past.
When it comes to the end of the year and the beginning of a new one, it’s good practice to look back in order to learn a few things about your behavior and decide what you want to change or keep the same in the new year.
This is pretty much the way we all make our resolutions. We reflect on the things we didn’t like and decide what we want to try to do differently. This can apply to pretty much any area of our lives, from habits to relationships and most of all our money.
If you’re looking for a way to change something important in your life, start with the way you view your finances. Do a personal money review.
The goal of a personal money review is to take account of your existing financial situation and determine where you think you’ll need to make changes to accomplish your new goals.
So, how do you do a personal money review? Fortunately, it’s not complicated and shouldn’t take a long time.
The first part of a personal money review is to review your income.
You want to take a look at where you made money over the year. This includes your income, bonuses, any dividends, money you made from side gigs, and even any notable gifts like any inheritance.
It may be challenging to collect all this information, but you can start with your latest paycheck and any quarterly statements for investment and bank accounts. Usually these are available to view at the beginning of January so you shouldn’t have to look too far to find them.
Then you add it all up to see how much money you brought in last year.
When reviewing your income, think about specific questions to ask like, Did you make as much as you wanted? Did you meet your savings goals? What are some specific ways to bring in some extra money this year?
Reviewing your income will give you an idea how much you can pull in in a year. If you have an income goal, use this as a gauge to discover how much more you need to bring in to meet that income goal.
The second part of your financial review is to look at your expenses.
Get a sense of what your expenses were throughout the year. If you’re a good budgeter, there shouldn’t be any surprises here, but if you’re new to budgeting this may take a little bit of digging.
Review the expenses you’ve incurred, especially the large ones. You may not be able to count all your expenses, unless you’re THAT organized, but take an account of what you can.
Have your credit card balances gone up? Maybe you’re beginning to charge too much on cards. Did your recurring expenses rise higher than expected? How much has food increased? Has your rent increased?
Take note of the answers to all these questions and calculate how much you’ll need to adjust in order to plan for the next year.
It’s not likely you’ll remember everything, but review anything big as well as your monthly expenses and other annual costs like car registration, life insurance and the like.
The idea of this is to detect certain areas of your spending over the last year that you either forgot about or didn’t plan for and then you should try to avoid those types of situations in the new year or find a way to budget extra for them this time around.
Review your credit report.
Why do you do this? Reviewing your credit report will give you an idea of where you stand from a lender’s perspective. If you’re planning for some big time purchases in the next year, whether it’s a new car, or a new house, your credit score will determine how likely you’ll be able to get financing for those things as well as how good of an interest rate you’ll be able to get.
When you’re looking over your score ask yourself if it’s as high as you would like it to be. If not, review your behavior over the last year and determine possible reasons why it may not be where you want it. Did you miss any payments? Apply for too many credit lines? Run your bills up too close to your credit limit? If some of these sound familiar, look at your credit report and review it for these types of actions.
Many popular credit platforms will assess your credit behavior and provide custom suggestions on what you can do to improve your score.
If you have a Triangle Better Checking account and are registered with ID protect, simply log into idprotectme247.com to see your credit score and view a free copy of your credit report.
If your score isn’t where you want it to be, take some time to draw up a strategy on how you can increase it over the next year.
The last thing you’ll want to do is review any wills or other documents if you’ve experienced any major life events over the last year.
Major life events like marriage or divorce, the birth of a child, death of a spouse, purchase or sale of a house, starting or selling a business or moving to a new state are all events that warrant adjusting a will and other important life documents.
If any of these have occurred in your life over the last year, it’ll be wise to review these documents and accounts to update beneficiary and asset information.
Professionals recommend you review your will and other documents completely every 4-5 years to keep things up to date. In this case, for a financial review, all you’ll need to consider is if anything has changed in the last year that would impact your will, and make a goal to take care of it through the proper channels.
You’ll also want to take a moment to review any of your insurance plans, auto, life, home and others to assess that the coverage is adequate, and the cost is competitive. One rule of thumb is that you should shop for certain types of insurance like auto insurance every two years to make sure you’re still getting a good price. If it’s been more than two years since you’ve explored other options, this year may be the year to try it out.
If you need any help when it comes to setting up a will or changing anything with your estate plan, you can contact our team at Triangle Financial Group. They offer financial planning services that cover everything from estate planning and insurance to investing and retirement.
That sums up this tip on how to do a personal money review.
The whole idea of a financial review is to take some time to reflect on the last year’s finances, the good and the bad, and take the necessary actions to set yourself up financially for the new year.
Set up a strategy for specific changes you want to make in the new year, whether it’s starting a budget, a side gig, increasing your income, building emergency savings, getting out of debt or investing.
Looking back gives you the chance to recognize both your successes and mistakes so you can set up new plans and goals for your future.
If there are any other tips or topics, you’d like us to cover, let us know at tcupodcast@trianglecu.org. Like and follow our Making Money Personal FB and IG page and look for our sponsor, Triangle Credit Union on social media to share your thoughts.
Thanks for listening to today’s Money Tip Tuesday and be sure to check out our other tips and episodes on the Making Money Personal podcast.
Have a great day!
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