Your End of Year Financial Audit

Now is the perfect time to take stock of your finances before we head into Christmas and a brand new year with brand new goals.

Before you can set yourself some money objectives for 2020, you need a clear picture of where you are right now.

A really useful tool I use is the MoneyGirl (Laura Adams) “Personal Financial Statement.”

Basically, you create a simple table of all of your assets and liabilities and the number you come up with at the end of your ‘Net Worth’.

Net worth: For individuals, net worth or wealth refers to an individual’s net economic position, the value of the individual’s assets minus liabilities. Examples of assets that an individual would factor into their net worth include retirement accounts, other investments, home(s), and vehicles. Liabilities include both secured debt (such as a home mortgage) and unsecured debt (such as consumer debt or personal loans). Typically intangible assets such as educational degrees are not factored into net worth, even though such assets positively contribute to one’s overall financial position. (Wikipedia)

Full disclosure, when I first did this about two years ago my Net Worth was about -£10,000. I had no savings, barely anything in my pension and debt in the form of two loans, a credit card and an overdraft. It’s now in the plus and while it’s still not a lot of money, it’s a HUGE difference and I love watching it grow every month. Getting organised and setting goals is the first step.

No matter how bad your finances are, it’s only temporary. Any sacrifices you make are temporary. You will come out the other side and you will be happy that you took control.

Here is my interpretation of the statement- just a simple table to input your totals. Use a formula to add total assets and total liabilities and then another in the net worth column where you minus one from the other. 

Personal Finance StatementNovember 2019
Sinking Fund
Travel Fund
Stocks and Shares ISA
Lifetime ISA
Pension fund
Asset Subtotal
Credit Card
Liability Subtotal
Net Worth(Assets – Liabilities)

One money objective – 

Financial goals in 2020

Your net worth is a good benchmark for tracking your financial progress and goals towards retirement. Do not worry about this too much when you are starting your debt free journey and don’t compare yourself to anyone else! Your finances, like everything else, are personal to your situation. 

Once you have worked out your assets and liabilities, think about what you want to achieve with your finances in 2020. Maybe you want to pay down debt or save for a house or another big purchase? Maybe you want to maximise your money by investing?

To keep you on track, set yourself an intention or a money objective that will inform the rest of your plans. 

Then, to make sure you are actually going to be able to achieve this, set yourself some goals for the year. 

  • Pay off XXX in debt
  • Save XX for XX
  • Increase income by XX

Keep coming back to your “why” whenever you are tempted to overspend or dip into your savings. Is this purchase going to get you where you want to be or is it getting in the way of you reaching your long-term goals?

Once you know what you’re working with and where you want to be in 12 months time, then it’s time to make your budget for the holiday season and the year to come.

Now is also a great time to review some of your expenses to make sure you are still getting the best deal for you.

Some items to look into:

  • Insurance – car, travel, home, contents
  • Gas and electricity
  • Internet
  • Mobile phone

Another area to look at while planning is your savings account. Are you getting the best interest rate? You could be missing out on money by leaving your hard-earned savings in an account with a low interest rate.

Setting your 2020 goals before Christmas will (hopefully) have them in front of your mind and help you to curb any overspending. 

Coming soon – a guide to a low cost, low waste Christmas that should help you minimise spending and stay on track for your money goals.

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