Tips To Help You Review Your Finances

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Financial experts say it is important for people to analyse their financial standing regularly to ensure they do not lose sight of their goals. In this article, SIMON EJEMBI provides tips to help you in that regard

Many people have not really taken time of their schedule to review their finances for years. They just take each day as it comes, spending their earnings on what they perceive to be the most pressing need at the time the get paid. According to financial experts, such people have no clue about how close or far they are from their financial goals. This is because they never try to put everything in perspective; a habit which is likely to delay or deny them financial freedom.

Experts say it is important for people to review their finances regularly; at least once in a year, if they can do it every quarter or month. Doing this will help individuals to evaluate their financial standing with regard to their goals in life. This, according to experts, is sure to help them make needed changes in order to achieve financial freedom. They insist that just as people need regular check-ups, so also do they need to check their finances regularly, to determine whether they are making progress or retrogressing.

In reviewing your finances, the following steps will be helpful.

 Get to know your goals

To review your finances, you first need to know where they ought to stand in the first place. What do you want to achieve this year? How close are you to achieving it? What is holding you back from achieving it? What would it take for you to achieve it? These are questions you need to answer. Without knowing what you want to achieve or how much you require in order to achieve your goal, for instance, you will not be able to determine how your finances truly stand. For example, if your plan is to buy a house for N5m in May, and by March you have N200, 000 as savings, you will sense that something has got to give if you are to achieve that. But when you have not goal, you may not be able to react appropriately, whether your savings is N1m or N200, 000.

You are therefore advised to know your goals as that will guide you in determining what progress you have made in the course of the period being reviewed.

Analyse your cash flow and assets

It is also important to determine how you are faring in terms of cash flow. Are you earning enough to meet your needs? Or is your expenditure much more than your income? To be in good shape financially, experts say your earnings have to be more than your expenditure.

By carrying out a cash flow analysis, you will be able to determine whether your expenses surpass your income; a situation which will require you to reduce your expenses in order for you to achieve financial freedom. Also, it is important to review your investments. Are they making the expected returns? If not, what is the reason for this? Do you need to take your investment somewhere else?

Apart from your cash flow, experts say it is equally important that you review your assets as well as your lifestyle. They say it is important that you note changes in your life, especially how those changes are likely to affect your expenses and goals. If you were working in Gombe State, for example, and you are transferred to the Federal Capital Territory, Abuja, you will be required to make many adjustments to your financial plans because your expenses are bound to be higher. Failure to make these changes will only leave you frustrated as your goals may not be achieved, especially as some cost-saving opportunities will be missed.

If your earnings are below your expenses and you have little to know investments, it is likely that you will be in debt. Determine how much you owe and if your repayment plan is effective. Consider viable alternatives if your findings are negative.

Consider inflation, stick to budget

In Nigeria today, the inflation rate is in two-digits. And while experts expect it to decline to a single-digit figure that has not happen. Some even believe it could rise. This means that at any point in time your purchasing power can become less and your income will become inadequate. In such times, you will be required to make a lot of budgetary adjustments and will require additional income streams to get by. What has your experience been like? Do you consider this in your financial plan? Experts say it is important that you do so to ensure that you stay on course to achieve your goals as stipulated in your financial plan.

Determine how prepared you are for emergencies

According to experts, it is important for people to have some form of emergency fund and to be prepared for emergencies. In this regard, it is important to determine whether you have your angles covered. Do you have adequate insurance cover? Have you prepared a will? etc. Is there money somewhere that is meant for a rainy day? Without all these or a clear plan towards achieving them, it means that you have some work to do to be financially independent.

According to experts, it is important that the amount you will need to achieve each of your financial goals is not only determined, but also provided for based on how important they are.

In world today, risks abound and at any time, a risk can backfire and cost you a lot of money or your source of livelihood. It is therefore important that at all times, there is a clear plan to bail you or your family out in such times.

Ensure your retirement plan is in order

Reviewing your finances is not just about your short-term goals. Long-term goals such as retirement plans are expected to be considered during every review. It is important to ensure that your retirement savings are intact and that they are never ignored. It is also important to ensure that the savings plan properly captures your likely retirement expenses and needs.

While there are many more tips that can help you in reviewing your finances and ensuring that you achieve your financial goals, those listed above are sure to provide you with a big push in the right direction if you consider them.

Punch Nigeria

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