Start the New Year with a Close Look at Your Finances

Professional advisors stress the importance of undergoing periodic financial review. Checking-in on various aspects of your finances can help you respond timely, when changes are needed, and to make the most of your investments and holdings. When interest rates favor a mortgage move, for instance, conducting regular financial assessments gives you the knowledge needed to act in your best interest. And when economic trends call for a shift in your investment strategy, it is periodic financial review that guides you to the best saving, pension, and securities strategies.

Timing your strategic financial review is a matter of convenience. But what better time than the beginning of a new calendar year to launch a comprehensive assessment of your financial affairs? If yours is like many other households, you’ll be elbow deep in your finances anyway, sorting out the effects of brisk holiday spending. For a foundation you can build on in 2018, start the year with financial review.

Get Control of Outgoings

The best financial assessments include specific details about cash flow and family finances. Outgoings represent a broad category, accounting for all the money flowing out of your personal economy. To get a true sense of financial conditions at home, it helps to break-down outgoings into subcategories you can easily track. Choose the structure that best fits your financial flow, accounting for everything you buy and all the bills you pay.

Household – Your monthly housing payment, whether for rent or mortgage, is an anchor household expense. You may choose to establish a separate category for your house expenses, like mortgage and insurance. Otherwise capture the costs in a broad household category, which also includes spending on things like:

  • Repairs
  • Maintenance
  • Cleaning supplies and services
  • Tax

Energy – The amount of money you spend on electricity and heating bills represents its own category. By isolating these expenses you are better prepared to make changes when savings opportunities arise. Changing to a more affordable supplier may be easier than you think, so there’s no excuse for overpaying on energy.

As a general rule, estimated bills end up costing more, in the long run, so metering your energy services is usually a better bet. Simple devices are available to monitor usage and generate energy bills reelecting your actually monthly payment obligation.

Banking and Finance – New rules for the way information is handled by banks could save you money on the cost of overdraft and financial products. The new regulations make it easier for you to share your financial information between banks and lenders, creating a more direct way to compare and change current accounts and other financial arrangements. Frequent financial review keeps you abreast of banking and finance developments like these, so you can make the most of your financial resources.

The amount of money you spend servicing debt plays a powerful role in your overall cost of living, especially when you carryover a substantial amount of debt from month to month. Whether you’re shopping short-term loans without formal credit checks or taking out financing for your next car, comparing interest rates and loan terms online gives you the information needed to settle on the most appropriate and affordable loans for your circumstances. By matching the right type of financing to the need at hand, you’ll save on the cost of repayment and avoid credit difficulties.

Insurance – It’s easy to fall into the habit of renewing cover without looking closely at the cost. Not all your policies expire at the end of the calendar year, but the start of a new year is a good time to evaluate your insurance needs and spending. If your circumstances changed during the year, such as a move, marriage, or another significant event, it is even more important to assess cover – you may be able to save money paring unnecessary premiums.

Managing your money is a full-time job. As part of your overall finance strategy, advisors recommend periodic review, accounting for your income, investments, and long-term financial goals. Whether you take a comprehensive look at your financial affairs twice a year or examine your finances quarterly, the start of a new year marks a logical time to assess your personal finances.

Paul graduated in 2001 with a degree in Finance. Since then he has gone on to work for several of the UK's most well-known financial institutions.

An avid blogger and a huge football fan, Paul is here to guide you through the ins and outs of personal finance and perhaps save you some money in the process!

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