One of the most important elements of keeping up with your finances is self-awareness. The ability to evaluate your progress and make money adjustments if necessary is crucial if you want to keep yourself on track and stable. There’s a lot of ways for you to adjust your plans after you make them, so you have to get into the mindset of thinking of your financial planning as a constant activity, not a one-off planning session you do once a year. In this post, we will list some of our favorite tips for making changes to your financial plans after you make them in ways that will benefit you or let you adapt to circumstances in a more flexible way.

Re-Evaluate Your Budget Every Month

If you did your planning at the beginning of the year, then you are doing everything correctly- it’s a great idea to set goals in advance for the medium term, and the beginning of the year is a good time to do that. However, it’s also important to make sure that you go back and revisit your plans frequently. Each month, don’t just do your monthly budget- check on how you are doing for your yearly goals each month as well. That lets you see if you need to make an adjustment to, for example, how much money you save per month or what you can expect to spend on Christmas gifts. Don’t get sucked into the trap of only thinking a month ahead- stay on top of the longer-term considerations as well.

Check Your Expense Categories Often

Being on top of your finances is more than just making note of how close you are to your goals. You should also carefully track your expenses and see where your money goes. It’s highly valuable for you to understand which expense categories cost you the most money. Conduct a little audit to see how you spend your money on, say, a monthly basis. If the results surprise you, that could indicate you are prone to impulse buys in a certain category like meals out or clothing, or that you need to rethink the number of movie rentals you make. Then, armed with that information, you can try to reduce your spending on your biggest expense categories and free up more money for saving.

Buy Gifts Months In Advance

One of the biggest predictable expenses for most people is Christmas presents. Big sale days like Black Friday and Cyber Monday encourage you to delay thinking about buying presents until late November, but it is actually a good idea to start early in the year. If you put the time in to build a list of presents early on, then you can enjoy summer sales and early fall sales, which are often just as big, if not bigger than the traditional big sale days in late fall or early winter. Plus, depending on what presents you choose, the gifts might be on bigger discounts because they are out of season. Prices on winter gear are lower in the summer because few people think to buy winter items then, and you can take advantage of that. If you buy early, you can save a lot on presents and save that money, or put it towards holiday travel expenses.

Maintain An Emergency Fund

Your emergency fund is not just a static savings account that you fill up once and forget. First of all, keep in mind that your emergency fund should have enough money to cover six months of expenses. As your spending evolves, that amount will change as well- keep a running total of the past six months of expenses for you so you have an up-to-date figure for how much you need to have banked. Furthermore, keep in mind that your emergency fund is not for typical purchases. If you find yourself dipping into the fund frequently, then reevaluate how you spend money each month. It’s for emergencies only, so at the end of every month transfer money to make sure it is topped off and check the account activity to ensure that you did not spend it on anything that was not an emergency.

Check Your Credit Score

You are entitled to three free credit reports each year- one from Experian, one from TransUnion, and one from Equifax. There is an official US government website to let you access these reports. In addition, some credit cards include free credit score reports as a perk. You don’t need to use all of these sources at once, but you should have a good idea of the condition of your credit at all times. It’s up to you to decide if you need an update. If you haven’t missed any payments, paid off a big debt, or applied for a new card or loan in the past few months, then your score should not have changed much. On the other hand, if you have done any of those things or you haven’t seen a credit report in a year, then you should probably get one. It will tell you your credit score and whether you have any important problems with your credit like delinquent accounts. This is also a good way to check for identity theft- if you see credit cards or loans on your report that you don’t remember taking out, you might be the victim of fraud or identity theft.

Do A Progress Check

Finally, once you set out your annual goals, take an hour or so every quarter to see how you are doing. Check to see if you are on pace to save the amount you anticipated, whether that be for retirement, a down payment, a vacation, or anything else. Evaluate the obstacles to your goals. If they are one-off expenses or emergencies, then you might just have had some bad luck. On the other hand, if you have systematically failed to meet your benchmarks simply by spending too much, then you have a problem that you can address. Sit down and think about ways to trim spending so that you can reach your financial goals.

If you follow these tips, you will be able to step back and evaluate your goals in the short, medium, and long term and know how to adjust your spending and saving to meet them. This is a valuable skill that gives you the flexibility to change your habits for your financial well being.

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