Establishing a Purposeful Routine for Financial Reflection

In our fast-paced world, it's easy to let our finances take a backseat as we focus on other priorities. But establishing a purposeful routine for regularly reviewing your finances not only brings clarity and control over your money, it can also lead to better decision-making and more peace of mind.

In this post, we'll explore what to review, how often to review your finances, how to make the routine stick, and the many benefits that come from a well-maintained financial check-in.

What to Review During Your Financial Check-In

When it comes to reviewing your finances, there are several key areas you should look at each time. You don't need to dive deep into every little detail, but checking these main areas will help you stay on top of your financial situation:

1) Income: Review your current income sources to ensure you're receiving all payments, whether from your job, business, investments, or side gigs. This can help you spot any inconsistencies or opportunities to increase earnings.

2) Expenses: Track your monthly spending. This includes fixed expenses like rent/mortgage, utilities, and subscriptions, as well as variable expenses like groceries, entertainment, and dining out. Compare your actual spending with your budget and look for areas where you can cut back.

3) Savings and Investments: Take a look at your savings goals, emergency fund, retirement accounts, and other investments. Are you making progress toward your financial goals? Are there any changes in interest rates, fees, or portfolio performance that need attention?

4) Debt: Check the status of any outstanding debts. This includes credit card balances, loans, and any other liabilities. Make sure you're on track to pay them down, and identify if there’s any room to pay off debt faster or restructure payments.

5) Net Worth: Periodically reviewing your net worth (the value of all your assets minus your liabilities) can give you a snapshot of your overall financial health and guide your decisions moving forward.

Why It’s Important to Review Regularly

Financial reviews shouldn’t just be done once a year during tax season or when a financial crisis strikes. Regular check-ins help you stay proactive about your finances rather than reactive, and can also help deal with issues early or avoid them entirely.

Here are a few reasons why it's important to practice regular financial reflection:

• Identify Problems Early: Regular reviews help catch financial issues early, whether it's overspending, missed payments, or poor investment performance. Catching issues early means you have time to course-correct before they become bigger problems.
• Stay Aligned with Your Goals: Your financial situation and goals may change over time. A regular review helps ensure that you’re still aligned with your objectives, whether you’re saving for a vacation, buying a house, or preparing for retirement.
• Build Confidence: Knowing where you stand financially helps reduce anxiety and build confidence. It empowers you to make informed decisions and take control of your financial future.
• Enhance Financial Practices: Regular financial reviews help reinforce positive practices, like budgeting, saving, and investing. The more often you engage with your finances, the more natural these practices become.

How Often Should You Review Your Finances?

The frequency of your reviews will depend on your financial situation and personal preferences, but here are some general guidelines:

• Monthly: At a minimum, aim to review your finances at least once a month. This will give you enough time to assess your income, expenses, savings, and investments. It also allows you to adjust your budget for any changes in your spending or income.
• Quarterly: For more in-depth reviews, such as assessing your investment portfolio or tracking long-term goals, consider doing a quarterly check-in. This can help you stay on top of more strategic financial planning.
• Annually: Once a year, it’s helpful to do a comprehensive financial review that includes a deep dive into all aspects of your finances, including revisiting your long-term goals and making adjustments if necessary.

How to Make the Routine Stick

Starting a new financial practice can be challenging, but with the right approach, you can make it a regular part of your routine.

Here are some tips to increase the likelihood that your financial reviews become a lasting practice:

1) Schedule It: Put your financial review on your calendar just like any other important appointment. Consistency is key, so try to set a specific time each month or quarter for your review.

2) Start Small: If you're new to reviewing your finances, start with a small, manageable task—like reviewing your bank account balances or tracking your expenses for the month—and gradually build up to more comprehensive reviews as you get comfortable.

3) Use Technology: Leverage budgeting apps or financial tools, such as the Finesse app, that automatically track and categorize your spending. Many apps offer reminders and notifications to help you stay on track.

4) Create a Routine: Pair your financial review with another routine activity, like the first Sunday of each month or the end of your workday on Fridays. Practices are easier to stick to when they are associated with another established routine.

5) Keep It Positive: Approach your financial review with a mindset of curiosity and improvement, not guilt or frustration. Look for progress and celebrate small wins, like staying within budget or reducing credit card debt.

Benefits of Regularly Reviewing Your Finances

The benefits of practicing regular financial reviews go far beyond just knowing where your money is going. Here are some of the top advantages:

• Improved Financial Health: Regular reviews help you stay on top of your spending, savings, and investments, which leads to a stronger overall financial position. You're more likely to stay on track with your goals and avoid financial pitfalls.
• Increased Savings: By tracking your expenses and identifying areas where you can cut back, you’ll be able to free up more money for savings and investing. You’ll also be more likely to spot opportunities to invest in assets that will grow your wealth over time.
• Better Financial Decisions: When you have an accurate picture of your finances, you're better equipped to make informed financial decisions, whether it's choosing the best credit card, deciding when to refinance a loan, or knowing how much to save for a big purchase.
• Reduced Stress and Anxiety: Financial stress is often a result of uncertainty or fear of the unknown. Regular reviews give you the clarity and control you need to feel more confident in your financial situation, which can significantly reduce anxiety.
• Improved Long-Term Planning: Regular check-ins allow you to adjust your financial strategy as your life circumstances change. Whether you’re dealing with a pay raise, a new expense, or a change in goals, consistent reviews help you stay on course.

The Bottom Line

Regularly reviewing your finances is an empowering practice that can make a significant difference in your financial health. By making the effort to review your income, expenses, savings, and debt regularly, you can keep your finances in check and make informed decisions that align with your goals.

The more you practice this, the easier it becomes, and the more control you'll feel over your financial future. The benefits—improved financial health, increased savings, and reduced stress—are well worth the investment of time. So, take the first step today: schedule your first financial review, and watch how this small practice can lead to big changes in your life.