How to organize Your Finances with an Annual Review + free printables (2024)

You DID it! You’ve made it to the final month of the Organize and Refine Your Home Challenge! As we wrap up the year,this month’s challenge topic —How to organize your finances — seems appropriate, don’t you think?

After all, December is typically the month we spend money with reckless abandon. It’s also the time of year that we’re naturally inclined to review our financial situation as we head into a brand new year.

So this is how December’s challenge will play out:

• Part 1 — Organize your finances by conducting a yearly review
• Part 2 — Organize your finances by setting up a bill management system

How to Organize Your Finances in 5 Easy Steps

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Let me begin today’s post with a few disclaimers:

1. I’m not a financial advisor. I am not offering specific financial advice here. Instead, I’m sharing ideas for how to organize the information you may need to make good financial decisions;
2. Everyone’s financial situation is different and varies in complexity. With that in mind, I’m going to cover some basic concepts that should be applicable to most people. Use my tips as a starting point, then consult with a financial advisor who can guide you based on the organized information you’ve put together.

Don’t have a financial advisor? I highly recommend Dave Ramsey’s Complete Guide to Money and the Total Money Makeover books. My husband and I are Dave Ramsey disciples and have benefitted so much from his financial wisdom over the years.

Before we dig into the five steps, I should also mention that there are several great personal finance software options on the market for those of you who prefer to use digital organizing tools. Some of the most popular ones include:

• Quicken
• Mint
• Personal Capital

This post is geared toward those of you who prefer manual/paper organizing methods, but all of the steps can be completed using any of the above-mentioned digital personal finance tools as well.

Now onto the five steps to organize your finances.

1. Calculate Your Net Worth

Calculating your net worth is a great place to begin when it comes to getting an overall sense of where you stand financially. Essentially, your net worth can be calculated using this basic formula:

NET WORTH = TOTAL ASSETS – TOTAL LIABILITIES (DEBT)

Assets include: cash savings, retirement savings, investments, home equity, insurance annuities, vehicles and other personal property

Liabilities (debts) include:mortgages, credit cards, car loans, personal loans, student loans, etc.

It takes a bit of legwork to gather up all of the numbers needed to perform this basic calculation. To help you along in the process, I created a worksheet that you can use to record all of your raw data to calculate that magic number (read to the end of the post to learn how you can download a free copy for yourself).

Since your net worth is a great overall barometer of your financial health, comparing your net worth from one year to the next is a good way to determine whether you are moving in the right direction.

2. Create a Monthly Spending Plan (aka a Budget)

In order to properly manage your money, you need to first have a good understanding of your monthly cash flow. A monthly spending plan is the basic tool you need to track your cash flow.

I prefer the term Monthly Spending Plan over Budget, because frankly I hate the idea of living within the confines of a set budget. It’s pure semantics I know, but somehow a spending plan sounds more fun, don’t you think??

You might already have a tried-and-true method for tracking your income and expenses from month to month. If so, great! If not (or you’re not loving your current method), consider exploring the budgeting tools included in one of the personal finance software options I mentioned above.

OR, if you want something super simple, I’m sharing my Monthly Spending Plan Template (created in Numbers for Mac) that we use in our household (read to the end of the post to learn how you can download your template for free).

This is the one area that I strongly recommend using a digital organizing method over a paper method, since there are so many moving parts when it comes to tracking income and expenses each month. Paper & pencil tends to be really inefficient.

{my Monthly Spending Plan Template}

3. Review Your Spending Plan

I tend to make minor adjustments to our spending plan each month to include expenses that occur only in specific months (e.g., quarterly tax payments, holiday gifts, etc). But each year, I also complete a more comprehensive review of how well we stuck to our monthly plan.

During the annual review, we make notes of which expense categories are regularly over or under what we’ve allocated in the plan. We then use that info to modify the spending plan for the coming year.

This is also a great opportunity to review your list of expenses with an eye towards cutting out the fat. Ask yourself, “Is there anything in my list of expenses that I can eliminate?” Think underutilized memberships, unread magazine subscriptions, etc.

And yes, I’ve created a printable to help with the annual spending plan review as well (see bottom of post to download your free copy).

4. Review Financial Accounts

I find it very useful to carve out some time at the end of the year to take a good hard look at all of our financial accounts and utility services to see if there might be any opportunities to save money.

During your account review session, take a close look at these accounts and ask the following questions:

• Mortgage (Does it make sense to refinance at this time?)
• Bank accounts (Is there another type of account that incurs less fees?)
• Credit cards (How much am I paying in interest? Should I consolidate my balances?)
• Insurance policies (Am I over-insured? Have my circ*mstances changed?)
• Utilities (Is there a less expensive plan? Can I get a better rate?)

I’m always pleasantly surprised by how much money we save by tweaking things after the account review. We tend to not pay attention to the terms, interest rates, and fee increases associated with these financial accounts.

That’s why planning a regular account review each year (or more frequently!) is a critical step in organizing your finances.

5. Review Your Credit Report(s)

The final step in the annual financial review process is to pull all of your credit reports and inspect them for errors.

If you find incorrect information, it’s super important to correct those errors. You can do so by contacting the appropriate credit bureau and filing a dispute.

In addition to looking for errors, it’s useful to know your current credit score so that you have an objective understanding of your “creditworthiness”. This information comes in handy if you have plans to refinance or secure any other type of loan in the coming year.

Here’s more detailed information on how to get free credit reports each year.

I’ve created a handy-dandy checklist that you can use as a guide to completing your annual personal finance review process (see how to download yours for free below).

The Organize Your Finances Printable Set

The Organize Your Finances Printable Set is FREE to my VIP community (a.k.a. newsletter subscribers). Get instant access to the printable set by filling out this form:

Your Yearly Financial Review Assignment:

At the end of each year:

1. Calculate your net worth (using the Annual Net Worth Worksheet, or digital financial tool of your choice
2. Create a monthly spending plan if you don’t already have one in place
3. Complete an annual review of your monthly spending plan and use this data to modify your plan as needed
4. Review all financial accounts and make changes as needed(use the Annual Personal Finance Review Checklist as a guide)
5. Pull credit reports from each credit reporting agency and review for errors

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This post is part of the Organize and Refine Your Home Challenge