Learn Financial Literacy : personal dashboard guide
A financial audit is a comprehensive review of your money situation to determine your financial health and identify areas for improvement. It's an important step towards achieving financial literacy and maintaining financial stability.
If you are new to the world of personal finance you may have never done a personal audit. Learning about money can be confusing and dreadful. My hope is this checklist will walk you through what you need to complete your first financial audit.
This checklist DOES require you to invest in some time. To understand your money, and set you and your family for success, you'll create a "financial dashboard" of your past, present and future money flow.
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Review your expenses, in conducting a financial audit, first let’s review your expenses.
Financial Audit
Start by gathering all of your bills, receipts, and bank statements for the past three to six months. Categorize your expenses into fixed and variable expenses. Fixed expenses are recurring expenses that are the same each month, like rent or mortgage payments, while variable expenses are those that can vary from month to month, like groceries or entertainment. Review your expenses to identify areas where you can cut back, like reducing dining out expenses or subscription services.
financial audit
financial audit
2. The next step is to review your income. Gather your pay stubs, income statements, and any other documents that reflect your income. Calculate your net income by subtracting taxes and other deductions from your gross income. Compare your net income to your expenses to determine if you are living within your means. If you're spending more than you earn, you may need to find ways to increase your income, like taking on a side job or negotiating a salary increase.
financial audit
3. Next review your debt. Make a list of all your debts, including credit card balances, loans, and mortgages. Note the interest rates, minimum payments, and due dates for each debt. Consider strategies for paying off your debts, like paying off high-interest debts first, consolidating debts into a lower interest rate, or negotiating with creditors to reduce interest rates or monthly payments.
financial audit
4. Next review your savings. Calculate your net worth by subtracting your debts from your assets. Review your emergency fund to ensure you have enough savings to cover unexpected expenses. Consider ways to increase your savings, like setting up automatic contributions to a retirement account, or making additional contributions to an investment account.
5. Now that you have all your numbers gathered, as well as thought about some decision points, it's time to start developing a budget.
financial audit
financial audit
personal audit
Your budget should include:
-income after NECESSARY expenses
-total amount left over to work with
-debt payoff plan
-savings goals
-age of retirement goal and the plan to get there
financial audit
personal audit
A personal financial audit is a critical tool for achieving financial stability and reaching your financial goals. By following these steps, you can gain a better understanding of your financial situation and identify areas for improvement. I hope you found this checklist helpful.
XOXO,
Kristal
