Do a 'New Year, New You' Personal Finance Assessment

Companies do annual reports; you should do the same. List your assets in a spreadsheet, personal finance app, or even on good old-fashioned paper. Do you own a home or vehicle or both? What was your salary over the past year? How are your retirement accounts looking? Do you have an emergency fund in cash?

Contrary to most personal money advice columns, you don’t have to be exacting in these steps. The idea is to give yourself a “big picture” of your earnings and assets that you can easily keep in mind as you move through your year. The dollars and cents are not imperative here. What you’re aiming at is the greater sense of knowing what you own, how much money it takes to maintain what you own, and the potential you have to earn and save money.

Think about Your Expenses

Please note this does not mean you have to “write down everything you spend” for a week or month. That’s a lot of work, and you’ll mostly have a list of your smallest and least consequential expenses when you’re done.

If you must write down what you spend, make a list of the big-ticket items: Housing payments. Student loans. Car loans. Home, car, and life insurance. Health insurance premiums. Utility bills. Retirement contributions. Possible ongoing health issues and prescription costs.

You can make that list by entering the expenses as monthly costs (if you pay any premiums annually, remember to divide them by 12 to see your monthly outlay) or as annual ones. The basic idea is to get a number for the non-negotiable costs in your life, which is the number you need to consider when comparing it to the number you got listing your assets.

If you’re comfortable with the big numbers and everything makes sense, by all means, start investigating the smaller spending numbers in your life. How many subscriptions do you have, and are you not just using but maximizing all of them? Are there any you can cancel without harming your quality of life? How much are you spending on food, clothing, gifts, and other recreational pursuits?

List Five Money Goals For the Coming Year

By now, you should have a good picture of what you make, what you spend, and the type of money it takes to put you in a lifestyle you can be comfortable with. Now it’s time to think even bigger.

Finance can be as much about emotion as cold, complex numbers. How do you feel about your financial picture? What would you change if you could? The thoughts you have in answer to those questions should guide your money goals for the coming year.

Would you like to earn more money? Write down a tangible goal of obtaining a better-paying job, asking for a raise, or developing a side gig. Would you like to save more money? Make a goal for increased monthly contributions to retirement. Would you like to change the way you invest? Write down a plan directing yourself to become involved in the stock market.

It doesn’t even have to be five goals. If you take it seriously, making and meeting even one personal finance goal in a year can change your life.

Treat Yourself To a Money Education

Everyone expects to be naturally good at money, but that’s not how it works.

Being good with money, like any other habit or skill, requires time and some learning to develop. In this new year, take a bit of time to educate yourself on money words and topics. Read some Forbes online. Peruse Yahoo Finance. Buy a new book on saving or making money; if you look at Amazon or the New York Times bestseller lists, books about finance are always easy to find.

The more you know about money, the more you’ll be prepared to enter the new year with a better personal finance understanding and goals. You owe it to yourself to do a “new year, new you” money assessment.