The end of a year is a time for reflection. As you plan your end-of-the-year celebrations and start to plan your new year resolutions, you may want to consider taking some time to take a closer look at your finances. A year-end personal money review can help you reflect on the choices you made over the previous year and help guide you to make better financial choices in the new year.

Let’s take a look at what a year-end personal money review is and how it can help you have a better relationship with money

What is a year-end personal money review?

Simply put, a year-end personal money review is a financial check-up that helps you reflect on your financial life over the past year. As the year comes to an end, you’ll want to take a closer look at the year in both numbers and how you feel about the decisions you’ve made and the actions you’ve taken. We recommend conducting an annual personal money review every year to reflect on your relationship with your finances.

Let’s take a closer look at all of the things you’ll want to consider when building out your annual personal money review.

Review your inflows

For starters, you’ll want to take a look at how much you made this year. What were all the different ways you’ve earned money? Did you earn money in any unexpected ways, like earning dividends through your investments? When you look at your income, reflect on the time and energy you’ve spent earning that money. 

Review your outflows and spending habits

Next, spend some time reviewing the ways you spent your money throughout the year. If you haven’t been keeping track of your expenditures with a budget or budgeting app, check to see if your bank and credit card offers free spending breakdowns for the month and for the year. Many banks and credit card companies offer this. Compare your annual inflows to your outflows. Does your income exceed expenses? If not, how can you balance this equation?

When reviewing your spending, spend some time reflecting on purchases that feel the most valuable or additive in your life. First, I encourage you to take a moment to express and feel gratitude for the things you were able to purchase that made a positive impact on your and your family’s life. Additionally, spend some time reflecting on why these particular ways that you’ve spent money have meant the most to you. Understanding what you value will continue to help you find ways that spending money is a positive exchange of energy.

Was there anything surprising that you learned reviewing your spending habits for the year? Are there things you’d like to change or improve upon? 

So much can change in a year and when your life changes, your spending habits should change too. We recommend reviewing and revising your spending plan every year to ensure you are taking new expenses, life changes, or income changes into consideration. 

Review your net worth

Your net worth is the value of your assets (valuable things you own like your cash, investments, real estate, art, or other valuable artifacts) minus your debts. Your net worth is an important measurement because building wealth is a way to avoid fragility and the path to achieving financial freedom. When your net worth is high enough, the income stream from your wealth covers your expenses and you no longer need to trade time for money. That is the holy grail of financial freedom. Even if you are far away from that point, having wealth is still important. It can make you feel secure and give you options so you don’t feel trapped in a job or financially stagnant. 

How much has your net worth changed over the last twelve months? How much have you put towards investments, like your retirement account? How much have you paid down debt? Reflect on the growth in your net worth. Do you feel satisfied with your progress over the last year? No matter what your current net worth is, it’s important to remember that it’s temporary. 

When you think about your net worth goals for next year, consider the financial habit you’d need to adopt to achieve your goal. Goals are great because they get you pointed in the right direction, but habits are key because they are much more within your control.

New and old money stories

In the last year, were you able to uncover any money stories, narratives, beliefs, or cognitive biases that you actively worked on changing? For example, believing that “people like you don’t invest” or “I am terrible with money.” What’s an old story about money that you’re leaving behind?

What is a new money story, narrative, belief, or positive cognitive bias that you want to incorporate into your life? For example, “I am smart and capable,” or “I am worthy of investing in my future.” What’s a new money story that you’re bringing into the new year?

Evaluate your will and assets

Every year comes with new changes. During your year-end personal money review, you may want to consider reviewing your will. Review your beneficiaries, make sure you have everything covered, and consider any change you want to make. Not only is this a great year-end habit, but keeping everything up to date can also give you peace of mind.

Overall, conducting a year-end personal money review is one of the best ways to ensure you are actively adjusting and making changes that align with your livelihood. It’s also a great time to make sure you’re habits are in line with your values and goals.

Remember: Setting a time to conduct your annual personal money review can help increase your awareness, visualize your goals, and analyze your flaws. This small habit can help dictate your financial choices going into the new year and give you the confidence to manage your money.