Performing a Yearly Financial Overhaul
The only way to really know which direction your finances are headed is to take a close look at them on a regular basis and make any necessary changes. Take these steps to overhaul your finances at least once per year.
We’re told to replace our smoke detector’s battery every year, but what about our budgets and financial plan? Are they charged and ready to go for next year? Every November (once we find whether a salary increase is coming or not), we revamp our spending plan. Each time it gets easier as there is more “tweaking” involved, and less “chucking to start from scratch.” We evaluate using these questions.
Can we cut back within an existing category, like food? Or clothing? Can we lower the thermostat? Or use less electricity? Are there options for our health needs? Can we reduce our car insurance premium? This is where strategies come in and where most personal finance resources put their efforts. Dollar Stretcher archives are a great place to start.
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Have any life changing events impacted our budget? Our son starting college has. It’s resulted in lower food costs and higher school expenses. When our youngest broke his arm, that made a huge dent in our medical account. Hopefully a raise is coming this year. But we’re also responsible for a greater share of health costs. Recovery from or planning for a financial blow takes thinking through the options.
Are we on target with our life goals? Can we do anything to better realize them? Let’s say retirement is the biggie. Can we skimp in any area to boost savings? Take $5 off food costs every week and we have $260 in a year. Take $20 off and we have over a $1,000. No small potatoes. What investment strategies should we consider? Some people have options through their jobs. Even so, the research burden is on the individual. This may be the time to tackle the stacks at your local public library. Is there a three to six month cushion in place? Are there higher rates out there for our CDs as they come due? Should we consider laddering? Would a money market be a better choice?
Is there any wiggle room? Being financially blind-sided is no fun. Been there and bought the tee shirt. An emergency fund gives you the freedom to roll with the punches a bit more, and even help someone else if they’re in need. We try to have one in addition to the cushion.
So let’s crack open our budget books, sit down with a cup of coffee, and tackle the job.
Reviewed November 2021
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- 5 Simple Budget Cuts That Can Save $200 a Month
- How to Track Down Unclaimed Funds Owed You
- 32 Ways to Save Money on Your Utility Bills
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- How to Maximize Profits When Selling Online
- Staying Motivated to Continue Digging Yourself Out of Debt