How to Do a Complete Self Audit of Your Financial Situation

We get our cars serviced, go to the doctor for health checks and take our pets to the vet.

But what about our finances?

How healthy do you feel when it comes to your handling of money?

Is it thriving, doing okay or on life support?

The only way to find out is to do a self audit of your financial situation for a proper diagnosis.

 

Income:

If you were to see a Financial Planner, the first thing they would do is an audit of your financial situation. The starting point is to look at your total income from different sources.

This isn’t just salary or wages, but can include returns from investments such as stocks, shares or managed funds. It also includes welfare payments from the government or family trust funds and inheritances. Be sure to include any savings you’ve accumulated as well.

 

Expenses:

The next step in your audit is to look at your total expenses, including things like:

• Mortgage repayments or rent
• Groceries
• Travel costs
• Loan and credit card repayments
• Utility bills (gas, electricity, water, phone and internet)
• Personal grooming (clothing, accessories, haircuts, etc)

Do you have an emergency fund in place to handle crisis situations?

 

Overall Financial Position:

Once you’ve calculated these amounts, subtract your total expenses from total income to determine your overall financial situation. How does it look? Are you making more than you are spending or the other way around?

If you’re in the red, it’s time to take control and talk to someone about how to get on top of your debts. Talk to a debt solutions experts who can help you restructure your bills, make payments more manageable and allow you to pay off all of your debt more quickly.

 

Financial Goals and Strategies:

Once you know where you stand financially, you can then start to map where’d you like to be and how to get there. If debt is a problem for you, dealing with this is the number one priority for two reasons.

First, your current payments are consuming a portion of your income that could be used for other purposes and most likely, holding you back from achieving what you would like to in life.

Second, new legislation now allows lenders to take a detailed look into your credit history, rather than just your credit rating. This means they can see how much finance you’ve used over time and how well you’ve used it. This might affect your ability to secure finance in the future for things that really count like a mortgage or capital to start your own business.

Once again, it’s advisable to seek professional advice to help you get back on track and take control of your financial stability now and into the future.

 

Featured image courtesy of Flickr – Thomas Hawk