Annual Financial Review

Understanding your good moves, as well as identifying your mistakes, can be a great way to improve the way you manage money going forward.

One of the best things you can do for yourself as the year winds down is to perform a financial year-in-review. Performing a financial review is an intentional, comprehensive effort that will help you understand your current financial state and develop insight into any changes or adjustments you may need to make.

Your year-end review should cover all your money issues for the year. Here are some categories to help you get started.


Okay, let’s dig out those goals you wrote down last January. How did you perform compared to your goals? If you didn’t come close, you may need to re-evaluate how you set your targets. 

If you did come close but didn’t quite make it, now’s the time to evaluate what happened to prevent that goal and how you could have done things differently. 

If you made the goal, congrats to you! But wait, if you feel you achieved it too easily, then just go back and recheck whether you have missed anything or not.

Looking at your goals not only holds you accountable to them but can help shape your goals and behavior for next year. Take some time to picture where you want to be financially next year at this time, and make the appropriate goals to get there. And make sure that your 3 critical goals are placed namely emergency fund, retirement plan, and child education plan.


Whether or not you had a specific income goal in mind, you should take a few minutes to review your income. Depending on your circumstances, this could involve your salary and whether or not you received a raise and/or bonus. But it could also involve side hustles or a business of your own. Did you meet the income part of your budget this year?

While you can cut your spending or move it around between categories, raising your income is generally the most significant adjustment you make to your budget. In what ways can you earn more in the New Year?


Review where your money went this year. Did it go towards what’s important to you or did you fritter it away on conveniences or impulse buys? Take a good hard look at any habits you need to change and make gradual adjustments.

Don’t just evaluate the discretionary funds, but also your “fixed” monthly bills.  For instance, would cutting the cord on cable or reducing your smartphone data plan help your financial goals?


How did you do on your saving this year? What was your saving rate (% of income saved)

Do you have an emergency fund? Do you have other savings for short and long-term saving goals?

If you didn’t save much this year, now’s the time to plan how you’re going to improve that in the coming year. Increase income, reduce spending, or both, and make sure the difference goes into saving with automatic transfers.


Also, take a look at your investments. How did your investments perform this year? What did those investments cost you? Are you satisfied with your portfolio? It’s also time to look at your asset allocation and rebalance your portfolio to reflect your risk tolerance and maintain diversity in your investments.

In this inflation-bearing world, it is very important to invest in investment instruments that offer inflation-beating returns. So, which instrument offers the same? Yes! It’s equity. You can invest in equity mutual funds and earn inflation-beating returns in the long term. 

You might have heard that equity is volatile in nature, however,  don’t get worried about short-term volatility in the case of your equity investments, think from the long-term perspective and stay invested. Historically, equity instruments are delivering inflation-beating returns in the long term.

You can check out the INVEST option on the home page of the LXME app and look out for various equity-based portfolios which are diversified, well-researched, and curated by experts.

Net Worth

Your net worth is your assets minus your debts and gives you a good “big picture” number of how you’re doing. But it generally doesn’t move around that much, so if you don’t monitor it monthly, at least check it once a year. Compare it to prior months/years to make sure you’re moving in the right direction!

Credit Score

If you haven’t recently, it’s an excellent time to review your credit rating.

Your credit score can affect things like loan interest rates, auto insurance rates, and more. If your credit score isn’t as high as you’d like to be, make it a goal to improve your score. You may need to start paying your bills on time (which you should do anyway!), reduce your debt, or even increase your credit line to reduce your utilization. 

See, a year-end review wasn’t so painful, was it? And now you’ll be ready to ring in the New Year knowing where you stand and where you’re headed.

You don’t have to be financially perfect this year or even next year. What matters is that you review your past and learn from it. If you do this regularly now, your future self will thank you for the help in achieving financial success.

This year before starting the year calculate what corpus you need to achieve and how much you need to save and invest to fulfill that goal. For easier calculations, you can check out different LXME calculators which will enable you to evaluate how much you need to accumulate and how much you need to invest.

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