As the year draws to a close, you may find yourself reflecting on the year and what you have achieved. This is also a great time to revisit your personal finances to check in on the goals you set at the beginning of the year and review how you managed your expenses over the year. To help you get started with your end of year personal financial review, we have prepared a few areas of your finances you may like to revisit.
Review your expenses
It’s no secret that inflation has impacted many households this year, so it’s important to review your expenses when you conduct your yearly review. You may like to list out all of your major expenses for the year, such as insurances, estimated food and grocery bills, and utilities bills, so you can clearly see how much money was dedicated to each expense1. Perhaps you have a personal expenses tracker – this could come in handy here!
Once you know how much money was spent on each type of major expense throughout the year, you may also like to compare some of these bills to the previous year. Often, it can be common for expenses such as insurances and utilities to fluctuate year-to-year. Seeing major increases in one year compared to another may prompt you to reconsider which provider you purchase these expenses through, such as car insurance, home insurance, internet and the like1.
An end of year review of your expenses also allows you to take note of any categories of expenses you could cut down on or cut out of your budget completely1. For example, you may decide to reduce the number of streaming subscriptions you pay for or choose to cancel your gym membership. You’ll also start to notice trends in your spending habits, which can help you develop some new saving strategies to try in the new year1.
Income vs expenses
It’s not just important to review your expenses, it’s also a good idea to compare your total expenses to your annual income. Knowing whether you spent more money than you made is just one way you can become more conscious of your spending habits1. You may even decide to develop and implement a few saving strategies if you find you are spending more money than you’re making in a year1.
Understanding how your income stacks up against your expenses is also helpful for planning for your future finances1. You may be considering making big purchases in the years to come, such as buying a house, so having the insight of an end of year financial review can help. The results of your review may encourage you to delay some of these bigger decisions until you have more money saved or it may even be the prompt you need to tighten up your budget1.
Conduct a ‘budget check in’
Reevaluating your budget is a key part of any personal financial review, particularly as you’re looking ahead to the new year and planning your financial goals. To start with, you may like to reflect on whether the budget you set yourself was suitable and you were easily able to stick to it1. If you found you were constantly going over your budget, this could be another opportunity to reevaluate your expenses and spending habits1. It may also alert you to whether you need to allow more money in your budget for certain expenses over others1.
One very important part of any personal budget which can often be overlooked is ensuring you’re putting money towards your savings frequently. An end of year review of your personal finances is the perfect opportunity to revisit how much money you were allocating towards savings in your budget and whether this needs to be increased or decreased1. In doing so, you may even discover that you need to change the frequency of your budget. Perhaps you’ve always worked off a monthly budget but, during your financial review, you might notice having a more frequent budget could help you curb your spending and save more1.
It's important to remember that regardless of the budget you design in your end of year financial review, you aren’t bound to that budget only. As the new year progresses, you may find you need to adapt your budget, particularly if your personal financial circumstances have changed.
Check on debts
Probably the part of your personal finances you would rather forget, revisiting your debts may not be the most fun part of your end of year review, but it can help you develop your budget and goals for the new year.
Put a positive spin on it by taking note of how much you managed to pay down your loan this year compared to last year2. This may even help you set a goal and decide if you want to aim to pay off more of your loan in the new year. Plus, reviewing your loans and other debts allows you to factor repayments into your new year budget2.
Setting savings goals
Revisiting your savings goals is another part of your end of year personal financial review that is very important. When reevaluating your savings goals, it’s a good idea to not just review whether you achieved those goals but to also consider whether your personal circumstances allowed for you to achieve these goals2. You may have found that as the year progressed, your financial circumstances changed, so that’s why it’s always important to reconsider goals regularly. Perhaps you’re happy with the savings goals you set at the beginning of the year and are happy to continue those goals into the new year2. Maybe you’re looking to change them to suit your personal situation better. Whatever you decide, keep in mind that no goal is too simple or small!
When reevaluating your savings goals, you may even like to reconsider the type of savings account you have chosen for yourself. At Queensland Country Bank, there are a few different options for savings accounts that you could consider*.
Planning for next year
Perhaps the most important part of your end of year financial review is walking away with an idea of what you’ll keep the same and do differently next year. Your personal financial review creates the pathway for you to start the new year off right by setting new financial goals and developing your budget.
*Terms and conditions of Queensland Country Bank’s Savings accounts apply. View the relevant TMDs available at queenslandcountry.bank. Normal lending criteria, terms, conditions and fees apply and are available on request.
General Advice Warning: This information is intended to be general in nature and is not personal financial advice. It does not take into account your objectives, financial situation or needs. Before acting on any information in this article, you should consider the appropriateness of the information provided. In particular, you should seek independent financial advice.
Sources
1Forbes, 2022, 14 essential personal finance checks to do before the end of the year,
2Kimberly Palmer, 2023, A fall financial cleanse could get your spending back on track, Nerd Wallet, https://www.nerdwallet.com/article/finance/a-fall-financial-cleanse-could-get-your-spending-back-on-track