A review of your past savings goals and net worth are an important part of your annual financial check-up. They can help you create meaningful and realistic goals for the upcoming year.
This is also the season for appreciating what we have. Giving to charity is a great way to express that appreciation, celebrate the holidays, and connect to the communities that we care about.
Let’s start with your financial review.
Review progress on your savings goals. Pull out your original list of goals from last year, and take a look back at your savings account statements. If you have been tracking your progress on each goal or can use that function in your financial software, pull up those records.
Which goals did you meet for the year? How soon were you able to meet them? Did you have strategies that helped you to save, such as automatic deposits or involving your family in the savings goal? Were your goals too big to manage or were they the right size for your budget?
If you were unable to meet a goal, use it as a learning experience to help you understand how you can create a manageable goal next year. If you did meet your goals, take some time to celebrate! This will give you more incentive to pursue and meet goals next year.
Calculate your net worth. Your net worth provides you with an overall view of your financial situation. This can help you monitor your progress from year to year, and help steer your finances in the direction you want to go. All you need to do to find your net worth is total your assets, total your liabilities (your debts), and subtract one from the other.
First, start with your assets. List the value of your home, car, and other big-ticket items that you own. Then, look at statements for your savings, retirement, and investment accounts. List your current balances, and find the sum total of all of your assets.
Then, list your liabilities. If you have already prepared a snapshot overview of your debts, pull that out now. If not, simply list the names and total remaining balances for each of your loans (including any mortgage, auto, home equity, student and personal loans) and credit cards. Add these balances together, and subtract your liability total from your assets.
If you are young, you may have a very large mortgage, car loan, or other debt, and the net worth figure may be discouraging. Just remember, this is common when you’re young. What’s more important at this time in your life is to establish a steady pattern of incremental growth. You can accomplish this by steadily paying down your debt, saving, investing in retirement, and managing your daily finances responsibly.
Charitable donations. The holiday season is a time for giving, both to our loved ones and to the charitable organizations that serve our community.
As you consider making donations, think about what you value, what you believe in, and organizations that have made an impact on you or people that you care about. Where do you think your contribution would do the most good?
When you make donations, file any records you receive. You may be able to take a tax deduction with your donation, and you may develop an interest in the organization, and look into becoming more involved in a cause that you care about.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org