Financial Checkups

Every couple of months, at a minimum, you should review your financial standing and how you are progressing towards your goals. In some circumstances you’ll need to do this review based on changes in your life instead of sticking to a firm timeline. These changes can include, but are not limited to, changes to the make up of your family, like the birth of a child, or moving, especially with a simultaneous career change, and changes to your financial situation, like an inheritance, a raise, or a temporary or permanent reduction in income. All of these situations necessitate the review of your finances. If you are the reason for this change, it’s important that you look at your finances before you voluntarily change your situation. I don’t pretend to be perfect, and despite reviewing my finances before I bought my house, I was very close to going into the red each month for about six months after I moved. Careful planning and consideration reduce the risk of making a financial mistake, but you can’t know of, or plan for, all eventualities.

The first step in your financial reviews should be a quick look at your budget, taking into account any
changes to your income or expenses. This will give you the necessary information to determine if you’ll need to make any changes to your spending or saving plans. There’s no point in cutting back on something that you enjoy and is a good value if you still have extra money at the end of the month. Similarly, you can’t spend more money following a raise, if your circumstances have allocated that money for you already.

Now that you know how your budget has been impacted, it’s time to reconsider those priorities of yours in order to ensure that everything is still in line with your goals. If at anytime your budgeted goals no longer reflect what you’re working towards, it’s time to review your budget or your goals. As you can see, if you’ve read some of the other posts on my blog, a lot of the topics we cover are related, and doing just one thing can’t help you achieve your goals.

Once you’re done with your financial review, you’ll know that you’re progressing as planned towards your next financial milestones. If your circumstances change, or a couple of months has passed by, it’s time to start all over again. As I wrote this post, I had the chance to reconsider my own financial goals, and I ended up making some tweaks to realign my budget with my goals. These exercises should help you to reduce financial stress and the stress and/or guilt you feel spending on yourself. The idea being that when you know how much money you have, and where it's going, spending within your budget can be guilt free.