How I Perform My Year-End Financial Review
December 27, 2018Editor’s note: As 2018 draws to a close and we launch 2019, I’ve asked each of our bloggers to reflect on their own personal goals, plans or thoughts on the past or upcoming year. Our hope is that you not only draw inspiration from our sharing over the coming weeks, but also that we are all able to feel more connected through our shared human experience and recognize that no matter where we are on our personal financial wellness journeys, that we all have similar hopes, dreams and struggles. Happy holidays! Here’s what Cyrus has to say:
As the year ends, I tend to turn my focus inward. I turn to the successes, the failures, and the changes that occurred in my life throughout the year. Obviously, a good bit of this introspection considers what went well and what didn’t financially. The intent is not to beat myself up about the negatives, but to learn what went well and what didn’t, then build from there. Here is how I assess my own financial decisions at the end of the year.
How to perform a year-end financial review
First, gather all your information
You may already have your opinion about the financial happenings of 2018, but before you give yourself a grade based on what you remember, pull together some reliable data. Here’s what I focus on:
Reviewing a budgeting app or online banking: If you use a budgeting app (for example, Mint) to look at your spending and budget targets, then much of the work for this step is already done. If you aren’t using an app, your online banking website may be tracking your spending for you, so check there. I use this information to track my budgeting goals and determine how close I was to sticking to them.
Reflecting on any financial milestones: What were the game changers for you financially in 2018? Did you get a higher than expected tax refund or bonus? Were there any financial surprises that threw your budget off? For me, one was definitely having to buy a car unexpectedly.
Taking your financial wellness assessment: This is a great way to track your financial health from year to year. Ask your employer if they offer an online financial wellness assessment as part of your financial wellness program. If not, you can use this Financial Health Assessment to see how you are doing in the area of cash management.
Celebrating the victories: In the New Year’s spirit, take a moment to toast the decisions that went well financially. This year our family achieved a long-term goal of buying a family car with cash. The opportunity to do so wasn’t expected, but because we had some cash tucked away for sudden financial changes, we were able to take advantage of a surprising situation. My wife and I have high-fived each other a few times to celebrate reaching that goal. We have since added additional goals to our financial bucket list.
Analyzing the problems: Where did things get off track this year? Were you anticipating a tax refund but ended up having to pay? Were you caught financially unprepared for a financial emergency? It is easy to tuck away those negative memories, but this is where that old saying about those who don’t learn from history are doomed to repeat it seems to hold true. What can you do right now to prepare if that situation occurs again?
Deploying your game plan: Create an action plan to make a change in your finances as the year ends. We offer several resources like this one that can give you some concrete steps to end the year. If your company offers a financial wellness benefit, speak with someone that can help you with your action steps.
Whether you have more things to toast than problems to analyze or vice versa its ok. A new year is a great opportunity to take the lessons learned and use them make your finances more efficient and less stressful.