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Get financially fit for 2013 with a year-end financial review

Are you in need of some financial guidance? Before you make your fiscal resolutions and goals for 2013, here are a few tips to guide your 2012 personal finance review.

Couple going over finances

As yet another year comes to a close in just a few short weeks, this time of year tends to bring in bouts of self-reflection and resolutions. Let SheKnows guide you through the critical stage of your annual reflection process: Your year-end financial review.

Step 1 summary:

  • Gather your financial records wherever you keep them
  • Put together your spending totals for each category in your budget

Step 1: Get organized with your financial info

It can feel like a daunting task to get this year’s financial information organized so you can clearly see where you are on track and identify patterns of mistakes. Luckily, the more organized you are with your financial data the easier it is to keep track of where your money is going throughout the months.

If you use personal accounting software like, you’ll often find your personal year-end review is just a mouse click away. (However, these programs require diligent and consistent input in order to generate meaningful trends.) If you have consistently used personal accounting software, make sure it is updated and then generate the annual review. It will often show you where your money went both in terms of a percentage of your income and how far above or below you were with your budget.

Some people also use a data analysis tool like Microsoft Excel to create and update their budgets. If this is your method, it may just take a bit more work to tally up the numbers from each month. Credit cards will often produce a statement of your yearly spending, and you’ll need to pull the totals from each card you used. (Be sure to include interest charges and other fees in your totals.) Unfortunately, most banks do not offer this feature with their checking accounts so loyal debit card users keep in this in mind — step 1 may require sifting through many financial statements.

If you records are scattered, this is your first clue — think of it more like a flashing neon sign — that you probably need to get organized for 2013.

Step 2 summary:

  • Find out you where you went over your budget
  • Find out where you were under your budget
  • Calculate the differences to find out where your money really went
  • Spot patterns

Step 2: Make comparisons and find patterns

This is the step where your past sins will come back to haunt you, but it is the most important stage because it shows the true reality of your financial situation on a day-to-day basis. Did you allot $50 per month for Starbucks only to find you spent, on average, $100 per month? That adds up to $600 per year in unplanned expenses! The point here isn’t that it’s bad or wrong to enjoy a daily latte, but that it’s critical to know where your money is going. When you spot patterns, for example, that you consistently underestimate your budget, it makes it much easier to adjust other categories accordingly. And if you find yourself generally stressed about money, this step will help point you in the right direction to finding peace with financial matters through greater control and awareness.

Step 3: Adjust the budget for 2013

Step 3 summary:

  • Adjust categories to account for true spending habits
  • Make larger, overall reductions to account for 2012 overspending
  • Add new categories and set aside monthly income as needed

After you make comparisons and spot patterns in your spending habits for 2012, you can adjust your budget for 2013. This might mean you need to reduce your overall spending to compensate for overspending in 2012. Or, it may just mean you need to shift money from certain categories to others to match the reality of your daily financial picture with what is on paper.

Also, you can adjust the budget for 2013 to include any goals you have for the upcoming year. Add categories like “Vacation Allowance” or “Splurges” and set aside monthly income so that you are prepared to spend money on big-ticket items. This way you can still spend money on things you want, but you maintain control over where the money comes from — this prevents you from feeling stressed or blindsided about purchases.

Wishing everyone a safe and happy New Year!

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