Over the last six months so much happened, and I fell over the blogging wagon. However I am now back and what better post to come back with other than ‘hitting that reset button’. It is often so easy to fall off the wagon and I can attest to that, but what’s important is how we find our way back. We are already past the mid-year point and before we know it, we will be celebrating Christmas and ushering in a new year. Time is moving fast and I believe it’s important to check whether we are still on track with the goals we made at the beginning of the year. Most of us made financial resolutions or at least I did, I had a few goals and habits I wanted to cultivate. I think it’s the high time we re-evaluate where we are at and where we are heading. If you are wondering on where to begin, here are a few questions I used to do my financial review and hit the reset button:
- Am I on the right track to meet my financial goals?
During the start of the year, we made a list of our key financial goals to achieve but as the wise once said, change is inevitable. A lot could’ve happened or changed in a period of over six months. E.g. an emergency situation might have occurred which wiped out our savings or on the other hand, we may have more money coming our way than we anticipated. The key is adaptability.
Whatever be the case, it’s important we analyse our current overall position against our financial goals. Ask yourself these 3 key questions 1. What were my goals at the beginning of the year? 2. How much progress have I made so far? 3. What needs to be done during the remainder of the year so that I can still achieve my goals?
- What’s the condition of my savings?
Most of us made resolutions on savings, I know I did and it was a huge one. Ideally, since we are past the mid-year mark, we should have been able to stack up a considerable amount. We should ideally have achieved over 50% of the target. If we have, kudos! we deserve a pat on the back however if we have not, that may mean we probably need to re-evaluate our monthly savings. We may need to find a way to increase that monthly savings amount to ensure we still hit our annual target by the end of the year. This may include reducing our spending plans or finding new sources of income to boost our savings. If that is not feasible, then we may consider reviewing our annual target. However I totally discourage the latter. We can do it people, we can hit that target.
- How are my investments performing?
Investing is a common goal most of us make. For those with no prior investments, the mid year mark should be a set time to start investing. By mid-year we should have saved a considerable amount to enable us make that initial investment. Sit and analyse what investment is ideal and make that step. For those with already existing investments, a mistake we often do is to leave investments without regular monitoring. Periodical checking is a wise habit and regular reviews are important. This half-way mark is a good time to evaluate how our investment targets are doing and whether they are moving towards the right direction or do we need to re-evaluate the investments.
- What’s my debt position?
For those in debt, this should be top on our list. Clearing debt should be our first priority. We need to ask ourselves the hard questions. How much debt did we have at the beginning of the year? Is our debt level going up, declining, or unchanged from the start of the year? If it’s declining, how much have we knocked off and are we on track? And if it’s on the rise, what are the causes and how can we correct the situation. Note them down and start working on them. The sooner we get out the debt the sooner we will achieve our financial freedom.
- Am I living beyond my means?
After all is said and done I think this is the most important question to truly ask ourselves especially for those of us who find it difficult to save or are constantly in debt. If we are off in all of the above questions, we may need to find out if we are living within our means. I do believe how we choose to live our lives is very important in determining whether we will achieve financial freedom however for most people that decision is more of a personal and social question rather than a financial one. For most of us, this is determined by our social environment and the perception we want to pass across.
The easiest way to answer the question is by tracking our expenses and analysing it against our income. If at the end of the month our expenses are more than our income, then we are definitely leaving beyond our means. The saddest part is that this is the easiest and fastest way to financial ruin. However, the good news is that we can always change this. All we need to do is make that conscious decision to be more intentional on what we spend on rather than letting our environment dictate our spending habits.