Conduct a Financial Status Update to Start the New Year

Starting the New Year with full understanding of where you stand will put you on track to meeting your financial goals. So take pull out your financial documents, get out a pen and piece of paper, and jot down details of all your financial accounts. Having all the numbers in one place puts you in a much better decision making position than if they were all scattered. Here’s what to take account of:

Monthly household budget. Having a budget is the best way to make sure you stick to your financial goals and to be sure that you’re not spending more money than you can afford to. Update your monthly budget to compensate for any changes in income or expenses. For example, some of your service providers may have increased their rates or your pay may have changed. Make sure you account for these changes in your budget so you know how much money is available for accomplishing your financial goals this year.

Checking account and savings account balances. If you have separate savings account, for example, one for emergencies and one for vacations savings, make sure you label what the accounts are for. Even if you have funds co-mingled in a single account, you can note how much you have saved up for what purpose.

Investment account balances. Include your employer-sponsored retirement plans and any other investment accounts that you have outside of your job. If you don’t have any investment accounts right now, consider making it a goal to start one this year.

Mortgage and other loan balances. List the balances of your home loan, auto loan, student loans, or other loans you have. Including the current balance and interest rate to give you an idea of how much you have left to pay off. It can help to list your starting balance. That will give you some perspective on how much progress you’ve made in paying off your debt. Don’t be discouraged if it seems like you haven’t paid off much of your loan. Remember that much of your payment may be going to interest rather than principle in the first few years of the loan.

Credit card balances. Make a list of all your credit cards, the current balance, and the interest rate. This list will be especially useful if you’ve made it a goal to start (or continue) paying off your credit card debt this year.

How does this information help you? First, you have a perfect picture of your financial standing when you have all the details in front of you. You know how much you have in liquid assets (savings, retirement, etc.) and how much you have in liabilities.

You can make much better decisions about what you want to accomplish this year when you have all the facts in front of you. You can decide how you want to build your savings, what you want to contribute to retirement, and how much you want to pay toward your debts.

Keep in mind that you can only accomplish so much in one year, so set your goals accordingly. Create both short- and long-term goals to put yourself in the best situation to get your financial standing where you want it.

If you have an electronic copy of this financial status update, e.g. in a word processing table or spreadsheet, you can continually update it throughout the year, measuring your progress and seeing how far you’ve come. At the very least, save it until next year so you can see how much you’ve accomplished over this year.