Personal Annual Financial Review: Part 1: Budget

The yearly budget review is a great starting point for you annual financial review. You look at all of your real expenses over the past year and decide if you need to make any adjustments. This is where we usually find out if we eat out too much or were allocating too much money to our water bill. This step is critical!

Items examined in this section:

• Income: What are your sources of income and how much are they? Has their been any change in the past year that needs to be noted?
  
• Expenses: Look at the budget for your monthly expenses and also look at your actual payments for each. Also note any unexpected expenses and new ones not included in your budget.

Now that you have gathered all of the data for your budget it is time to make adjustments. Here are the key action items:

• Income: Total up your income and come up with a monthly figure. Insert it into your new budget. If you have side business or income note is separately for ease of accuracy and adjustment
• Expenses: Did you drop any expenses this year? Do you have any new ones to add? Adjust all numbers to reflect what you really need to cover them.
• Savings: Do you need to adjust the amount you move into savings up or down? Make this adjustment in your monthly budget as well.

Now you have adjusted your budget to reflect your current situation. The numbers do not have to be 100% accurate as they never will be! Rounding up is OK and is a best practice when creating your budget. Make any adjustments to automatic transfers as needed to cover the new amounts.

Tune in next week for Part 2: Savings & Debt Analysis!