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  • Writer's pictureAngela Stratman

Year End Financial Review

As we approach the end of another year, it's time to look at our finances. For some, this is an easy task. It may be painful for some, but I promise it will be worth it.



The first question I get asked is when I should do this; I usually do it on New Year's Day, with a hangover, I mean a large cup of coffee. I try to block 2 hours off to tackle this, but as I've been doing it, it takes less time. You can really do it anytime from the last week of the year to the 2nd week of the new year. You could do it quarterly or monthly, but let's not get ahead of ourselves.

The second question is, where should I tackle this project? You can spread out on a table or use a desk; I've even done it all from my iPad while watching football on the couch. You only need your bank and credit card statements or a device to log into said bank and credit card sites. I also like to have a notepad and a writing instrument.

The third question is, why bother? You haven't even started with what you have to do, and it already seems like too much. I was in tears the first year I tried to do this; we had charged so much because we didn't have things in the budget, like sports fees, sports equipment/uniforms, dinners out, charity events, and so much more. In the second year, we charged far less because we knew what we needed and when. Now, yes, expenses change, but some are more constant than you may realize. The purpose of this exercise is to see where you spent money in the past year; by where, I mean, did it come out of a checking account, savings account, or put on a credit card? You are also looking for how much and when these expenses occur.  


I hope I convinced you why this is important; let's get into how to do it.  

The first step is the hardest. Pull all banking statements for 1 year. This includes checking accounts, savings, money market, and any credit cards. You are looking for accounts you could have spent money from. If you have a Health Savings Account or Flexible Savings Account, you can include those as well, although, for the first year, I would skip these. Most financial institutions will let you download the file to CSV or Excel; that is what I do, but printing them is another option. If you print them, grab a few different color highlighters to group expenses by category.

Step number 2: determine the categories you want purchases to fall into. This may take a few tries. For example, I used to have a category called “food.” Then I realized I wanted to know fast food, groceries, and restaurants separately, so I had to break the category down. On the other hand, I had a category called car payment; I knew how much my car payment was, and I didn’t need to see that separated, so I merged it with my mortgage and called it “big ticket items.” Here are a couple of suggested lists; remember, as with everything, you need to adapt them to your life. If you rent, I would include your rent payment with Utilities as it is ongoing. If you live with family, use the categories that apply.

Step 3 is the longest of the steps; you need to go through each statement and categorize each charge/withdrawal from the account. I usually start with my credit cards and then go to my checking accounts. I don’t spend money from my savings accounts, so I give them a quick look to see if I had any withdrawals or transfers and then make a note of when and how much so when I review that statement, I can make an educated guess as to how it was used. The question was asked, what if I went to a store and purchased food, stuff, and some gifts? If you have the receipt, you can break it down or use a percentage for each category. Another question: what about taxes? I count these as charity. Why charity? Because they don’t fit any other category. Plus, my taxes go to help people supported by state and federally-funded programs, hence charity.

Step 4 is to total it up. I make two sets of totals, one for the categories and one based on whether it came from existing money or was charged on a card. That second part may not be necessary if you pay your cards off every month or put everything on a card to earn points or money back.

Step 5 is the painful part. Look at your totals and compare them to how much you bring home. If you are like most people, the categories total way more. Now, if you pay off your credit cards every month, you are double counting, but if you are paying a monthly payment and charging, you would still have both of those expenses (at least until the credit card is paid off).

Step 6 is the final step. Plan for the year ahead. Add known expenses to your budget calendar or listing of expenses. Things like oil changes and sporting fees happen on a pretty regular basis. Gifts happen around holidays and birthdays, which are planned as well. Check your budget, if you have one (you should), to ensure your numbers for food, gas, and entertainment are accurate. One year, I had planned $100 a week for groceries, but when I did the year-end review, I noticed it was closer to $200 by the time I included paper products and cleaning supplies.

When you finish this exercise, you may feel a few things: panic, exhaustion, understanding, and all valid. Remember, the purpose was to see where your spending happened, how much, and when. It was not to make you feel bad for decisions you already made. Adjust where you can; yes, you still need to pay your utilities, but could you reduce transportation costs? Can you change your student loan repayment plan to something less painful or ask for streaming service gift cards for gifts to cut those expenses?   

I hope you make the time to do this financial review, and if you ever need suggestions on how to adjust, reach out to me, and I’ll be happy to try to help.


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