Reviewing your Financial Statement for the New Course

Today is Friday and this weekend can be a good time to tidy up your finances and set financial goals for the next course that has just begun.

Many people continue to organize their life as a school year, from September to June and it is now when they establish the steps they will take over the next few months, rather than in January.

I think that it works much better to do it now since it is at this moment when a real change does take place, we go from summer and vacations back to work while from December to January, there really is no change in our lives.

So now is the best time to spend a few hours on your finances and make the necessary decisions and actions for the next course.

Starting the New Course

Review your documents and get rid of those that are not necessary

Having filed the 2012 income statement, I usually keep the statements of the last 5 years just in case they were necessary. And I keep the supply bills (electricity, gas, etc.) for the last 3 years.

Therefore, statements prior to 2008 and invoices dated before January 1, 2011 go to waste.

I also check the status of the rest of the documents, if they are well organized, if all the papers are present, etc.

Investigate the evolution of your investments

Take a few hours to thoroughly review your investments, whether in investment funds, stocks or fixed income products.

Decide if these investments are going in the right direction or if some adjustment is necessary. It is also a good time to study new investments or reinforce existing ones.

Rebalance your wallet

This is also a good time to rebalance your portfolio, if you have several equity and fixed income investment funds . It is time to decide where to place your investments in the coming months.

For example, you have decided to have your money for investments in 3 funds with the following pesos:

  • 50% of your investment in Fund A
  • 25% in Fund B
  • Another 25% in Fund C

During the last year, Fund C has done very well and the pesos are now:

  • 47% in Fund A
  • 23% in Fund B
  • 30% in Fund C

To have a well diversified portfolio and return to the initial pesos, it is necessary to sell 5% of fund C and, with that money, buy 3% of Fund A and 2% of Fund B.

Don’t become greedy and start investing everything in Fund C just because in the last year you have done better.

Protect yourself against risk by maintaining a diversified portfolio and if you focus on the short term, you will add more risk to your investments.

Check your expenses

Check your expenses

Study your expenses in detail and think of ways to reduce them and increase your savings. Also estimate your income over the next few months and how you will distribute that money between savings, investment and spending, through a small budget.

Look at your emergency fund , see that you have the right amount of money to cover your expenses for at least 6 months.

Do some long-term planning

Do some long-term planning

Study your goals and make sure you are on the right track. Take the time to set new goals for the new course. A savings goal or an investment goal. For example, save 15% more than last year or invest 2,000 euros more.

For me, these are important activities, boring yes but we must do so that everything rolls in the right way. And this weekend is as good to do as any other. So take advantage of the start of the course and check your financial status

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