Here’s a step by step guide to auditing your personal finances.
Step 1: Gather Your Materials
The first thing you need to do to conduct an audit is to gather your financial documents. Similar to when you’re starting to budget
, you’ll want to gather anything that can be helpful to review. This may include, but isn’t limited to 6 months or 1 year of credit card statements, bank transactions, and any savings accounts statements.
Try to gather anything that would be helpful to see how you’ve been spending and saving your money.
Step 2: Review Everything
Now that you have all of your materials gathered, start reviewing. Don’t just look at how much you spent vs. saved – see where you spent your money and on what. There will be some necessary expenses but pay special attention to those extras.
It’s not only about your intentional spending – review what you didn’t realize you may have been spending. For example, have you been paying for your checking account each month? Make sure you keep track of those fees and see how you can eliminate them. (Tip: One way you can eliminate checking account monthly fees is by opening an a free checking account with rewards
at Sikorsky Credit Union.)
Step 3: Evaluate
After your review, evaluate the information you were able to gather. Did you notice that you spent way over your budget in certain areas? Did you realize you were paying late fees every month or paying monthly service charges?
Do you have a lot of money in a low-interest savings account, when you could be investing in a certificate
Evaluate all of the data and move onto step 4.
Step 4: Seek Opportunities for Change
Seek out opportunities for change based on the evaluation. For example, if you noticed you started bringing in more income throughout the past year but you aren’t saving; it’s time to seek opportunities for change. See where you’re spending this money and either change your budget or adjust your spending so you can put more towards your savings. If you’ve spent $2500 on coffee at coffeeshops and you believe that’s too much money, try to set a budget for that spending area and save the difference.
Come up with a plan based on these opportunities.
Step 5: Execute
Now that you’ve seen where you’ve been spending and saving your money, and you’ve come up with a plan – it’s time to stick to it.
Start implementing that plan – whether that’s using direct deposit to save more or setting up auto payment so you’re never late again. Perhaps create a budget or adjust your budget to better fit your lifestyle goals.
The important thing is to execute on the plan you’ve created and get 2020 off to a great start.
A personal financial audit is an opportunity for you to review your income, your expenses, and your savings over a period of time to get a better idea of how you track in relation to any financial goals you may have set for yourself. Conducting a personal audit of your finances will help you ensure that despite any changes to your lifestyle or financial situation, you are still working towards your goals appropriately. By knowing how much money you’re spending, what you’re saving, and generally being aware of where your money is going, you’ll be able to make any appropriate changes as needed.