Managing personal finances isn’t something you should put on cruise control – the more actively you manage your money, the more your money will work for you. It’s time to take a close look at your finances and figure out what you can do to better direct them. Consider it spring-cleaning for your wallet!
A personal financial audit doesn’t have to be a tedious activity. It’s a relatively simple process that involves taking a look at where you stand right now financially, figuring out where you want to be, and deciding what steps you’re going to take to get there.
Where are you now?
If you’re not sure where you stand right now, find the answers to the following questions to get a good idea of your financial picture. (Download our checklist and track your answers as you go.)
- What is your income from all sources?
- What are your expenses and recurring debts?
- How much money do you have saved?
Do these numbers balance? If it seems like there’s more money going out than coming in, it’s time to make some big changes.
If your finances look pretty good, there are still some things you can do to take your finances from “OK” to “great.”
Where do you want to be? Now is the time to figure out your money goals. Tangible goals will make managing personal finances easier because you’ll know what you’re working toward and what you need to do to get there.
Consider some of these possible financial goals:
- Paying off debt
- Saving for a car or a down payment for a home
- Building up an emergency fund
- Investing or saving for retirement
Make a list of your short-term and long-term financial goals and prioritize them in order of importance to you.
What changes do you need to make? Here’s where the real changes happen – when you know what your current financial state is, you know where you want to be, and you’re ready to make it happen. Take stock and ask yourself these questions:
- Am I wasting money? Whether it’s an unused gym membership or a subscription you really don’t need, cancel services that are draining your wallet.
- How can I reduce my expenses? It may be time to examine the services you do need and see if it’s a good idea to explore a different (and less expensive) provider. Take a look at our blog on saving for ideas on other ways to cut costs.
- What habits need adjusting? Some of your buying habits may be thwarting your efforts. Before you spend money, consider if the purchase is necessary or if it goes against your financial goals. Take this financial spring-cleaning as an opportunity to adjust your mindset from “I want it now” to “How will this affect my finances later?”
- What tools can help me reach my goals? Automatic bill pay, mobile banking, and wealth management services are just a few of the many tools you should consider using to make your money easier to manage.
Declutter your finances! Once you have a clear vision of where you want your finances to be, managing personal finances takes on more purpose and becomes easier. Make decisions that lead toward your financial goals – not away from them.
What changes have you made to reach your financial goals? Share your tips for streamlining your finances in the comments.
Want some help decluttering your finances? Check out Cobalt CU’s free personal financial audit worksheet today!