Financial solutions company Think Money recommends looking back at your finances from this time last year to help you create a clearer picture of your current financial situation.
The comments came in response to protection insurance company Bright Grey’s advice to improve your financial ‘safety net’ in 2012. Are you saving at the moment? Could you be saving more? Think Money believes looking back at your finances from one year ago is an excellent way to identify whether your financial situation has improved – or worsened.
If your finances are in a worse shape than a year ago, you need to identify why before you can begin addressing the problem. Money problems ‘don’t usually come out of the blue’ – it’s likely there are some underlying issues with money that need to be addressed.
Looking back to twelve months ago, you may be able to identify the financial habits you had back then that helped you do well financially, as well as any ‘toxic’ habits that need banishing.
Think Money offered this additional advice to anyone with debts: “If you were managing your debts successfully a year ago, but feel you’ve lost control now, what were you doing differently then? Did you have fewer debts of smaller amounts, a higher disposable income, or were you simply more financially organised? If you’re facing debt problems, it’s important to get professional advice as early as possible, so you can find an approach to budgeting and debt management that works for you.”
Reviewing your spending regularly is an important part of debt management, as it could be that you’re overspending in areas where you could cut back, or it could help you identify other areas for improvement.