Reviewing Your Year’s Personal Finances
By Joan Honeycutt
As December draws to a close and the new year begins, many people like to take a look back at where they’ve been over the past year. This can be helpful, particularly when it comes to your personal finances. Only when you have a good idea of where you’ve been can you really plan for where you want to go. You may be wondering how you can do that and what you should be looking at. It doesn’t have to be complicated. Spend some time considering these categories and you will have a clearer picture of your financial picture.
Your Spending
First of all, look at what you’ve spend over the course of the year. Some people may keep a detailed log of expenses throughout the year, but not everyone is that organized. If you’re not, don’t worry. Simply review your checkbook register and your credit card statements. Categorize the transactions and add up the transaction amounts for each category. You’ll be able to see where your money went. You can also use this information to set up your budget for next year.
Your Savings
Just as important as what you spent this year is what you’ve saved. Look at the balances in your savings and investment accounts. How much have these accounts grown? As you examine your accounts, you’ll want to think about what you are saving for, what much you’ll need, and when you’ll need it. If your accounts are not growing fast enough, you might need to increase your contributions in the coming year.
Your Debts
It’s never anyone’s favorite number to contemplate but you can’t get a complete picture of your financial situation without examining your debts. How much were you able to pay them down this year? Did you take on more debt over the course of the year? Having too much debt, especially unsecured debt, can cause financial instability and even disaster. If your debts are getting out of control, you may want to speed up your repayment schedule in the coming year.
Your Taxes
Taxes are a certainty of life, but how much you pay can vary from year to year. While tax time is a little while off, you can still estimate your tax liability at the end of the year. Start with last year’s tax return and compare it to this year’s information. What has changed? This is also a good time to look at whether your situation has changed. Did you have a large tax-bill last year, requiring you to scramble for cash to pay it? Or an oversized refund, indicating the government got free use of your money all year? Maybe you need to change your number of exemptions for next year.
Your Insurance
Like taxes, insurance is an inescapable expense of life. You will probably always need some kinds of insurance, yet your stage in life and current obligations will determine what types and how much. The end of the year is a great time to evaluate what you have and what you need to protect. How has your life changed this year? Did you buy a house? Did you start a family? Did you become an empty-nester? These changes can all affect your insurance needs.
As you can see, looking back over the last year is really just your first step in looking forward and making plans for the next year. If we can help you with any of your plans for 2017, come in and talk with us anytime.
