The ending of one year and the start of a new one is the perfect time for stepping back and getting a bit of perspective on life.
If you’ve felt as if 2014 hasn’t been the greatest year for you financially then – like many other people –it might be time to give your finances a bit of an annual health check.
The idea is to get a clear picture of where you are with your finances, to identify problems and perhaps change the way you’re approaching managing your finances where there are issues.
What are your financial goals?
This is a great way to give your health check a focus and a context within which to start deciding whether you’re on the right lines with your money. If you’re trying to set goals then this could be anything from saving for a deposit for a house to paying off unsecured loan debts, putting money aside to fund travel or planning for a baby.
What is your income and what are your expenses?
This will be the basis of your financial health check, as it shows you what is coming in and what is going out. If there are adjustments that need to be made then it’s to these two flows of cash that you’re going to have to make them.
Remember to include all your income from a salary to benefits, pension and investment profits. Expenses-wise you should make sure that this covers rent/mortgage, household and personal bills, transport and tax, as well as monthly extras that count as the regular expense for you, from gym memberships to a socialising budget.
Do you know where your money goes?
This might sound like an odd question but for many of us getting to the end of the month and having those few tight days is a sign that we’re not 100% sure where the money we earn is ending up.
If that’s the case then you might want to consider tracking your expenditure for a month – either using past receipts and bank statements or beginning in 2015. This will show you where you’re wasting cash and where you can make savings.
Do you budget?
If you’re not 100% in control of your finances then you might want to consider a monthly budget. This is a great way of managing the money that you have so that you don’t waste on anything unnecessary. Use the information you’ve gathered to create a reasonable monthly budget that will cover your expenses and leave you with extra to help you start achieving your savings goals.
Are you managing your debts?
If you have debts then are you managing them in the most efficient way possible? For example, if you have a lot of money sitting on a credit card that has a high-interest rate, could you move this via a 0% balance transfer to another card and save yourself the interest?
If you’re finding yourself paying a lot of money out in bank charges as a result of missed payments could you move the payment dates to avoid payments going out of your account when there isn’t enough to cover them? Try to spot your areas of weakness and think of a fix for each one – and remember, even if the change seems small when it comes to finances, every little helps.