Budgeting is an important aspect of personal financial management. The process not only sheds light on the way money flows through your home, but it can also lead to savings, when budgets are successfully maintained. Without periodic review, however, budgets can veer off track.
Financial assessments occur during the course of routine business – as part of a loan application, for example. But unless you set-about periodic evaluation, months or even years may pass without a close look at your personal spending habits. Over time, the results can be catastrophic.
Without comprehensive financial evaluation, it is hard to be sure you’re making the most of your financial resources. Some advisors suggest an annual review, but others find comfort checking-in more frequently on important financial matters – choosing instead to review finances every six months or quarterly.
Start saving money today by conducting an initial review, and then reevaluate the following important budget considerations at least once a year.
Are You Overpaying for Insurance Policies?
Insurance coverage was once sold as part of a relationship offered by individual agents. There was comfort in the familiarity between neighborhood insurance sellers and the health, homes and automobiles of their clients. Today’s insurance landscape is entirely different than the friendly version of days gone by. The highly competitive industry is now built upon instant quotations and online comparison shopping. As a result, customer loyalty does not buy better premiums or preferred customer care.
In order to save money on the cost of insurance, evaluate each policy at renewal time. Is your home properly valued? Have you made improvements, which might lower your rate? Does your safe driving record or claim-free status qualify for a premium discount? Is a lower deductible a good idea? Answering these and other questions can lead to insurance savings.
Save with a Competitive Mortgage Interest Rate
Your home mortgage interest rate and loan terms may reflect conditions that were favorable at the time you signed-up, but leave room for improvement, by prevailing standards. Refinancing at a lower rate may cut your monthly payment and reduce the overall cost of your home. Closing costs apply, so it is important to crunch the numbers before counting on savings. Even with a modest improvement in the interest rate, however, standard refinancing costs are quickly recovered.
Check Your Commitment to Financial Health
When it comes to budgeting and money management, we can be our own worst enemies. As you conduct a comprehensive financial assessment, it is important to include a look at intangibles, such as commitment, discipline, and resolve.
Your discretionary spending record furnishes a snapshot of your retail habits. For the best results improving your financial status, it is important to review monthly statements, identifying exactly where your money goes. While it is relatively easy to account for major monthly installment obligations, like rent and mortgage payments, insurance premiums, and other recurring costs; poorly managed discretionary spending is where personal budgets frequently falter.
Controlling discretionary costs may test your attitudes about money, so conducting periodic review helps strengthen financial resolve. Once committed to saving cash, a well-crafted budget reinforces spending accountability and contributes to cash flow stability.
Subscriptions and Memberships
Although individual impulse purchases can damage a person’s budget, recurring expenses come around again and again, causing ongoing harm. Effective financial review accounts for subscriptions and memberships, including these costs:
Communications Charges – Mobile phone contracts and other service agreements carry-on for many months, so comparing alternatives is an essential first step toward savings. At each renewal, while penalties are not in force, evaluate competing providers, with an eye toward savings. You may end-up with your current carrier, but simply renewing for convenience can leave money on the table.
Fitness Facilities – Subscription services are not wasted when well-used, but gym and health club memberships are not productive unless you are working-out regularly. Promotions and health clubs are widespread, so restarting is easier than it once was. Don’t let your membership linger, instead review the need alongside other spending decisions and take the most economical approach.
Cable TV and Electronic Entertainment – Television and other subscription entertainment services are prolific, so it is possible to pay a fair price, without sacrificing service. To make the most of your entertainment budget; cable, satellite, internet, and other electronic connections should be reviewed annually and adjusted to bring home the best value.
Periodic financial review adds accountability to your personal finances. Without it, budgets head off-course and financial problems can sneak-up without warning. For the best results, review your finances at least once a year, including major concerns like insurance, housing, discretionary costs and most importantly – your financial mindset.