How To Audit Your Finances This Year
Today’s post is sponsored by myFICO. As always, all opinions are my own. Thanks for supporting the brands that support Gen Y Girl.
Ahhhh, money. I just love talking about money. Not that I have a ton of it – I can assure you I do NOT. But I do love keeping track of the little I do have.
I kid you not, I open my online bank accounts like 34 times a day.
LOL okay, fine. Maybe I have a slight problem, but honestly, keeping track of my money gives me a sense of control over my life, and it prevents me from making stupid money decisions.
I know that I can’t go out and buy a $300 purse. I know how close I am to paying off my car. I also know that this month we’re already on track to blowing our grocery budget, so PB&J sandwiches for the next few weeks it is!
But ok, I get that not everyone’s as OCD about their finances as I am. That’s why today I’m happy to be partnering with the team at myFICO to talk to you guys about auditing your finances this year.
Why an audit? Well, because it’s easy to go months at a time without even thinking about this stuff. And now that you’re an adult, this is what #adulting is all about – being responsible with your money because it’s an important part of your life.
So here are a few things you should pay attention to at least once a year while conducting a financial audit for yourself.
1. Your Savings
Sooo how exactly are you doing in terms of your savings, huh? Is your savings nonexistent, or are you regularly adding some money in that account? Obviously, I’m going to tell you that you should be trying to save SOMETHING. Even if it’s $10 a month, you ought to work on building a little nest egg because you never know when you’ll need some cash for an emergency. I’m personally a big fan of Dave Ramsey and the first step in his Baby Steps program is to save $1,000. So before you even start making big payments towards your debts, work on saving $1k.
2. Your Debts
Remember that time you walked into the mall and left with 5 new credit cards? Yea, that was fun. Until you went crazy, bought all the things, and then got a bill that made you want to cry. You actually have to pay that back, ya know? Credit doesn’t equal free money (even though I wish it did). So how are you doing in terms of getting that amount you owe down to zero? It’s ok if that amount is still pretty scary and large, but you have to know what it is in order to start making progress. My recommendation? Make a spreadsheet and list all of your debts. That way you can keep track of how much you owe and once you’ve got that $1k saved, you can start putting some money towards those debts.
3. Your Credit Score
Another part of this whole #adulting thing means making adult purchases eventually, and in order to do that, you’ll need good credit. Whether you’re looking to buy a house or a car anytime soon, whenever someone’s going to lend you a lot of money, the first thing they’re going to do is run your credit to make sure you’ll be able to pay them back. So what’s your credit score? Who the heck actually knows their number? Well, you SHOULD. And not only should you check on that number once a year, you should monitor it all the time. That’s how important it is.
myFICO can help you with that because they can provide instant online access to your FICO® Scores – the scores used in over 90% of lending decisions. Those are the scores that’ll determine whether or not you’re able to buy a car, qualify for a new credit card, or even buy a house. So again, you should know what those scores are.
They also provide their clients with a side by side view of the three most common credit reports (Equifax, TransUnion, and Experian). And that’s a good thing because you’re able to see where your credit stands with each of the three bureaus at any given time.
But I think the coolest and most helpful feature is their FICO Score Simulator. Basically, it allows you to see how different financial decisions could affect your FICO Score. Will getting a new credit card hurt or help you? How about if you pay down some of your debt? The simulator lets you know ahead of time if it’s a good idea, and that’s super valuable.
4. Your Budget
Now how about your budget? Do you even have one? If you do, have you been staying within your limits, or are there certain categories where you’ve been going way over? I like to look at my budget several times a month, but at least once a year, take a look at all of the significant categories where you’re spending money – groceries, gas, restaurants, etc. to see if there are any areas where you need to scale back or if you have leftover money every month that you could be saving.
5. Your Short + Long Term Goals
Once you’ve done all that, it’s good to sit down and think about your short term and long term financial goals. Are you working towards a new car? A vacation to Disneyland? Are you trying to pay off your debts within the next five years or are you already done with that and now saving for retirement? If you don’t set goals for yourself, it’s easy to get distracted and make bad financial decisions, so take some time and figure out what you want to do with your money. I mean, chances are you’re working your tail off for the money you do have, and it’s always put to better use if you have an actual plan.