If you find yourself wondering how the money in your wallet or bank account always seems to just disappear, it could mean you need to review your personal finances on a more regular basis. Your check-in schedule may be determined by how complicated your financial situation is, or by your own curiosity.
Keeping a closer eye on your spending, saving, and investing can provide a more accurate picture of where your money is going. It may allow a better assessment of what you’re doing right and what you might want to change.
And having that information could help when it comes to staying on track with short- and long-term financial goals.
That doesn’t mean a full-on personal financial review every day. And some categories (spending vs. saving, for example) might require more attention than others. Here’s a breakdown of how often a review might make sense.
Ways to Review Your Personal Finances
1. Tracking Spending
When the money from paychecks seems to just slip away, it’s often because there’s no household budget in place. There are no priorities set for where the money should go and no guidelines to follow.
Before putting together a budget plan, it can help to track what you spend money on—closely!—every day for at least a month or so.
That means writing down everything from rent to groceries to prescriptions and subscriptions—even that vanilla latte you pick up at Starbucks from time to time.
You can write down each expenditure as you go, or use software and a spreadsheet. Or you can use an app that does most of the work for you.
Once you see the actual numbers associated with how you spend money, you can use that information to set up a budget.
While you’re tweaking your budget (which could take weeks or even months), you may want to keep checking your spending daily, or at least weekly, to see if your expectations were realistic and if you’re staying on target. After that, you might be able to dial it back a little.
Tracking your spending can be a little like watching your weight: Some people find it effective to step on the scale every morning. If they’re over their goal, they can take action that day to get right back on track. Others manage just fine with a weekly or even monthly weigh-in.
Or you could do a little bit of both. If you want quick feedback on your spending, you may choose to do frequent spot checks using a mobile app. If you add reconciling bank and credit card statements to a monthly routine, you may have a better chance of nipping any weird charges, scams, or forgotten subscriptions in the bud.
You also may find that there are accounts you can consolidate—including credit cards and other debts—to simplify money management.
2. Reviewing the Budget
Let’s stick with that weight-watching analogy for just a little longer, because if a tracking app is like a scale, then a budget is like an overall diet plan.
When you’re trying to get your finances under control, you might decide to check your budget every day to be sure you’re following through on the plan or if it needs adjusting. But there may come a time when you feel as though you’ve got a solid, doable strategy, and you can cut back on how often you check your stats.
Some people do an annual budget review using information from the past year to adjust for the year ahead.
Others are more comfortable with a monthly checkup so they can nimbly make changes as new expenses and life changes come up. (They might also do a quarterly or annual review as part of a larger financial evaluation that includes checking their credit report.)
3. Monitoring Savings
It can be tough to stay motivated to reach a savings goal, whether it’s putting aside enough to take a vacation, building a “rainy day” fund, investing for the future in an IRA, or all of the above.
Just as reviewing your spending regularly may help you stay on track, watching your savings grow can reinforce the effort. You can do that as part of your monthly or quarterly budget review, but it also may help to track your savings just as you do your spending—with regular spot checks.
Using an app that links all of your financial accounts can put that information at your fingertips. And if you have a SoFi Money® cash management account, you can use the “vaults” feature to earmark money for various savings goals (buying an engagement ring, making a down payment on a house, taking that dream trip), and track your savings in real time with the SoFi® app.
Anyone who opens an investment account with SoFi® can use the app to follow investment savings progress as well.
4. Following Investments
Financial experts tend to walk a fine line when it comes to advising how often investors should check on their portfolio or individual investments.
They typically want their clients to know what they’ve invested in and why. But that doesn’t mean investors should stalk their retirement accounts—rejoicing with every high in the market and wincing (or worse) with every low.
That’s because some investors can get overly emotional when the market is doing its roller-coaster thing, and they’ve been known to react in ways that don’t necessarily benefit their long-term bottom line. (It’s not uncommon for investors to get greedy when the market is up, which can make them willing to take on more risk. And investors may get fearful when the market is down, which can make them overly cautious.)
If you’re into day trading or active trading—accepting that there’s a high risk of losing money in return for a potentially high return—you might be checking your investments every day, or even many times a day.
But if your money is in an IRA and 401(k), it’s meant for the long haul—a retirement that could be decades away. A quarterly, twice-a-year or even annual check-in could be enough to spot any disturbing trends.
The portfolio mix might be way off from an investor’s desired risk tolerance, for instance. And that regular check-in could be a good time to do some rebalancing, either by selling investments or redirecting future investments to get the asset allocation back in line.
Robo advisor platforms typically offer automated rebalancing, which can take that worry off investors’ shoulders, but investors may still wish to review their portfolios occasionally.
5. Attending to Taxes
It’s easy to put off thinking about income taxes until it’s time to file, but this is another slice of financial planning that can benefit from at least a once-a-year evaluation. And if you wait until you’re filling out tax forms, you may miss out on some savings.
Taxpayers usually have until the April 15 filing deadline to make tax-deductible contributions to a traditional IRA or 401(k) for the prior tax year.
But many tax strategies must be implemented by the end of the calendar year to have an impact on federal taxes, so November can be a good time to take a look at charitable contributions, converting money from a traditional IRA to a Roth account, making health savings account contributions, and using the money left in flexible spending accounts.
And if you’re self-employed and need a new laptop or other tax-deductible office equipment, you may want to consider whether it makes sense to buy it now or wait until the next tax year.
6. Evaluating Goals
When it comes to goal setting, it may help to think in terms of big goals and little goals.
Big goals might be things like sending your kids to college, buying a home, or retiring to a beautiful beach house. Smaller goals might include paying down credit card debt or growing an emergency fund.
Both types of goals may require regular evaluations—to see if you’re on track and determine if it’s still something you want. After all, circumstances and personal priorities can change.
But the check-in schedule might be different for big goals (once or twice a year could be enough) and small goals (monthly, combined with your budget once-over, may be more appropriate).
Life events—a new job or job loss, a baby, a move—also may trigger the need to reevaluate some goals, big and small. And you may want to do a review of all your goals whenever you achieve something on your list. (Rejoice and then refocus!)
An app that helps with goal setting and tracking could help you time your reviews in a way that works best for you and keeps you motivated to develop and maintain good financial habits.
Wrapping It All Up
If you’re doing lots of small check-ins throughout the year, it might not seem necessary to do one big annual personal finance review.
But a yearly evaluation offers the opportunity to pull everything together—all those separate slices—to see what’s working and what isn’t.
It also may be a good time to make any necessary updates to insurance policies and other documents and to gather up the paperwork you’ll need to file your taxes.
You also can examine if the way you’re managing your money suits your needs, or if it’s time to make some changes and perhaps update, consolidate, and automate some facets of your finances.
And if you do your review in November or December, you can make some financial resolutions to keep you motivated through the new year.
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