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Do a Year End Personal Finance/Budget Review

Updated on December 14, 2010

I know that working on a budget isn't everyone's (or anyone's!) favorite activity, but doing a year-end financial review can really benefit you. I am a firm believer in the Dave Ramsey method of budgeting to the penny for every single paycheck. This means that I don't have a yearly budget set in stone. Even so, I still find it very helpful to do a year-end budget review. Whether you have a yearly budget written out or not, a year-end review can help you reach your financial goals.

When you do a year-end budget review it would be easier if you had to some data to review. I am hoping that you track your spending to some extent. If you track your spending in any way, then pull this information together. If you don't, there are ways you can go back and track it. If you use a credit card for most purchases they usually have an option for tracking purchases based on set categories. If you use or other financial software they track spending as well. Whatever information you can gather the better.

I like to figure out what percentage of my income I am spending on each area of my budget. I total for the year each category and divide it by my income to get the percent. This will help you determine if a particular area of your budget is out of whack or not. You might discover that your mortgage payment, taxes, insurance, etc. equals 50% of your budget. No wonder you feel like you are drowning each month, that percentage is double what it should be. (This is just an example of what you might find).

You might realize that you spend more money eating out than eating at home. Hmm, if this is the way you want to spend your money great, but if this is surprising and you want those numbers to reverse then you can make the changes needed to make that happen. Many times a number looks high to me but when I figure the percentage out it is very reasonable. Sometimes a number is high and we are OK with that. Budgeting is all about choices. It is your job to make your budget fit your choices and priorities.

Part of your year-end financial review should be thinking over the last year and how you felt financially. Did it feel like you were finally in a good place? Think about what happened to allow you to get there and make sure you repeat that. Did it feel like you could barely stay afloat? Think about what you can do to change that. Did it seem as if you were spending money non-stop in certain areas (household repairs for us)? What can you do to stop the leaks?

Did you make any large purchases? Think about how you paid for them. Did you plan and save for months or were they spur of the moment? Did you travel a lot? Was it planned in advance or was it a last minute splurge? Your answers to these questions will help you determine your natural tendencies with money. They will also help you determine these choices are working for you.

A year-end financial review will help you see how you did overall the previous year and help you determine changes that need to be made for the following year. Having a good idea of where your money is going over the long haul is very beneficial in getting the big picture of your financial life. This information will hopefully help you make better choices and succeed financially next year.


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    • Hello, hello, profile image

      Hello, hello, 

      8 years ago from London, UK

      Thank you for a great idea and splendidly written hub.

    • chspublish profile image


      8 years ago from Ireland

      That is such a terrific thing to do, especially at the year end. I must confess I don't, but you're right looking at percentages etc is a very practical and visual way to assess where the money is going and how much of it etc. There's nothing like the cold hard reality of figures to get your attention on money spending matters.

      This hub is a real down to earth motivator. Thanks for the hub, Jennifer.


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