Where Do You Stand Financially? Time For A Quick Check In

By | October 22, 2017

We’re almost at the end of another year. How do your finances look? Here are some questions to ask yourself to better understand your financial position.

Where Do You Stand Financially? Time For A Quick Check In

It is a good practice to take some time out and reflect on where you stand financially. Do you have any savings? If yes, where have you stacked all the cash? Where have you been spending your life’s earnings? Have you invested in Fixed Deposits, Mutual Funds, real estate? Do you have any debt like a Home Loan or Personal Loan? Have you been putting your money to good use? These are some questions that you could ask yourself.

Whether you have been doing good financially or your finances are a wreck, the end of the year is a good time to sit back and review your financial condition. Don’t you agree? So, we have listed a few questions that could help you evaluate your finances better. Here you go:

How much debt do you have left?

Before you step into the New Year, it’s important to know how much debt you will be carrying with you. Debts can be anything from your Education Loan to an outstanding Credit Card balance to any amount that you owe your parents or friends. Calculate all your debts and include them in your plan for the year. You should aim to clear all your debts as soon as possible in the New Year. Got it?

Additional Reading: The Stack Method: An Effective And Speedy Way To Clear Your Debts

How do your savings look?

Have you saved enough? Take a look at your Savings Account. Did you save enough as per your plan? Could you have saved more? What stopped you from saving more? Think about it and make your next year’s savings plan accordingly.

Additional Reading: How To Get Started On Your Savings

Did you stick to your budget? If not, what happened?

If you’ve created a budget for yourself, did you stick to it or did you stray away from it?

If you did not stick to your budget, then it is time to analyse what went wrong.  Did you set an unrealistic budget? Were you too harsh on yourself? Identifying what went wrong can help you set a more realistic budget that is in sync with your financial goals. Not every person is the same. While one may perform better with a less draconian budget, another may do better with a well-structured one. This is why it is important for you to identify what budgeting strategy works for you and what doesn’t. Cool?

Additional Reading: How To Balance Your Income And Expenditure

What’s your Credit Score?

You do know that your Credit Score can either make you or break you, right? So, it is necessary that you know what determines your Credit Score. Some of the factors that affect your Credit Score are your payment history, history of responsible credit usage, the amount of debt you owe against your available credit, number of credit accounts you have, and the types of credit you have availed.

If you want to check your Experian Credit Score for free right away, click here.

Once you get your Credit Score, don’t just look at the score and ignore everything else. You should check your credit report as well. Reviewing your credit report is an important part of personal finance management. It allows you to identify and correct any inaccurate information and saves you from being a victim of identity theft.

Additional Reading: Credit Score vs Credit Remarks: Which Matters More?

Is your Credit Card worth it?

It is important to review your Credit Card expenditure and everything that you have gained from it. By gains, we are referring to reward points, cashback, low-interest rates, etc. If you haven’t been getting too many perks and benefits from your card, considering your expenditure, then maybe it’s time you upgraded to a better card.

And please use your Credit Card wisely. If you don’t, then you could hurt your Credit Score badly!

What are your financial goals for the upcoming year?

The end of the year is the right time to plan your financial objectives and goals for the upcoming year. It is always better to have a clear picture in your head. Set your financial goals beforehand. Your goals could be anything, like increasing your savings and investments to buying a house or car, paying off your debts or going on a vacation.

Additional Reading: Don’t Just Save, Invest

Once you have a clear idea of the goals, you need to strategise on how you’ll achieve those goals. Will you be cutting down on unnecessary expenditure, making lifestyle changes or investing in high-return avenues? The choice is yours to make.

Do you have an emergency fund?

You never know when you will be faced with a contingency. Hence, it is always better to be prepared than to regret later. So, do you have an emergency fund to tackle these unexpected emergencies? No? Then, this must be your priority. Create one now! Don’t know how to create an emergency fund? How big should your emergency fund be? It should be large enough to cover at least three to six months of your living expenses. This fund will be

How big should your emergency fund be? It should be large enough to cover at least three to six months of your living expenses. This fund will be your backup and tide you over tough financial times.

Have you been a victim to any poor money habits? What to do about them?

How good have your money habits been? Are there areas where you spend excessively when you don’t need to? Have you been excessively spending on cigarettes and alcohol? Maybe it is time to kick these poor money habits in the butt!

Additional Reading: Become a Crorepati: Kick the Butt

If you have been spending way beyond your means, it is time to cut down and go the frugal way. If you have been eating out often, it is time to start cooking at home. It is time to identify the habits that are wrecking your finances and change them before it’s too late.

Well, there you go! These questions will help you figure out where you stand financially and further help you chart out a sound financial plan. Since we’re close to the end of another year, why don’t you just take some time and ponder over these questions? We’re sure this will help you sort out your finances.

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