The end of the year is drawing near. The evenings are getting cooler, Halloween decorations are up, and the days are getting shorter. One of the top tasks that people should add to their list of things to do is to do a financial inventory in preparation for 2016.
What is a financial inventory? It is literally an inventory of all of the components to your financial life. You should look at the following: savings, checking accounts, retirement accounts, investments, insurance policies, and the list goes on.
Why do a financial inventory in October instead of at the end of the year?
You still have energy to deal with heavy issues such as your finances. Most people tend to struggle toward the end of the year and begin to lose their focus. It is not a coincidence that people take time off at the end of the year.
Beat your holiday malaise and spend time on your finances now by doing a financial inventory. Planning early gives you enough time to act thoughtfully and with purpose. You will give yourself enough time to think through what your future plans are and be able to act with purpose and clarity if you discover problem areas with your finances.
Time to adjust
You will know where you stand financially and have enough time to make the necessary adjustments to your savings, investment contributions, and have time to work on your budget if it has unexpectedly sprung a leak.
You will also have enough time to save money to and add to your investments or savings.
Financial inventory is a good practice
Why not do a financial inventory? You should make a point of looking at your finances throughout the year as a standard financial practice.
Taking the time to connect with your financial situation insures that you will always be in touch with your money. You will remove the element of surprise from your finances.
Find areas to save
See what worked and what didn’t work with your current year’s budget and change it for the upcoming year. Go through each line item in your budget and see if there is a way to cut or change what you’re paying for.
For example if your cell phone service is $100 a month perhaps there is an opportunity to change it to a cheaper service. Perhaps you’re paying a lot in rent but would like to cut that monthly cost to free up more money each month to use toward something else such as savings.
Ultimately, it is probably best that most people spend time looking at and going their finances. Most financial advisors say that in order to move forward from where you’re at you need to know where you currently stand. I
f you are operating in the dark with your finances stop being afraid of finding out what is going on with your finances. Operate from a point of extreme knowledge instead of ignorance. When you do periodic financial inventories you are empowered and able to make decisions that will be in your best interest. Once you complete your financial inventory feel confident about knowing where you stand!
Michelle Jackson is a personal finance and lifestyle blogger sharing her story at The Shop My Closet Project. Her goal is to help people cultivate their best life. When she’s not blogging or podcasting for Girl Gone Frugal you can find her riding her bike, going for coffee, or hiking in the mountains.