3 Ways to Strengthen Your Personal Finances

Most financial advisors recommend conducting periodic review, evaluating every aspect of your financial life.  Although more frequent monitoring is beneficial, a comprehensive annual assessment represents a minimum standard worth striving-for.  

In addition to increasing your understanding about your personal cash flow, an effective annual financial review should highlight actionable steps you can take to improve various aspects of your finances. Whether reducing your month-to-month spending obligations or reinforcing your long-term financial security, staying atop money matters gives you peace of mind and reinforces your financial health.

Follow your Money  

Without accurate understanding about where you money goes, it is difficult to make prudent financial decisions.  Does your cash flow consistently balance, or does your household economy operate in the red?  Is reckless spending draining your discretionary budget?  Are you paying too much for goods and services?  Each of these financial conditions leaves room for improvement, but unless you have a grasp on your spending habits, the symptoms can devastate your finances, before the underlying causes show through.

For the best financial outcomes, start with a comprehensive spending inventory, accounting for everything you buy.  Using a budgeting application or an old-fashioned 6-column ledger, devote yourself to tracking every household expenditure.  Starting with major obligations, such as monthly mortgage payments, insurance premiums, education costs, and other notable financial commitments, isolate and record each expense.  

Over the course of one to three months, it is possible to gather enough information to construct an accurate image of your personal cash flow.  And with precise, timely data at your disposal, it isn't hard to identify negative spending patterns. To complete the cycle, strengthen your finances with budget limits and adjust your spending to levels you can afford.

Save More 

Next to meeting everyday expenses, setting aside funds for the future is a primary financial priority. Unfortunately, when adjusted for age and anticipated retirement needs, many families are not keeping-up with desired savings levels.  Economic constraints, household spending demands, and other factors interfere with personal savings, so if an assessment show's you're behind, it may be time to redouble your saving efforts.  Use these strategies to pump-up your reserves:
  • Automate - Whether you are funding an education savings account, a home down payment, or simply setting aside money for retirement, making automatic contributions can keep you on track.  For starters, the money is reserved for savings before entering your cash flow stream, so you are less likely to miss the funds.  And since withdrawals come directly from your account or paychecks, you won't miss making needed contributions.

  • Set Goals and Evaluate Progress - Saving "as much as possible" doesn't always pan-out, so using a more reliable approach can improve your financial outlook.  To make the most of your incoming resources, designate savings for particular purposes and set goals on a realistic timetable.  A one-year plan will get you started, but looking ahead 3-5 years gives you the wide-angle view needed for proper planning.  As you approach each milestone, evaluate progress using the metrics you established up-front.  Are you on pace with savings goals, or trailing behind projected saving?  Periodic assessments give you time to adjust your plan (and expectations), without falling further behind.

  • Build on Your Success - The hardest savings to fund are the first resources set aside, so it is important to remember you are in it for the long haul.  Saving early in life and building on each minor success gives your investments time to mature, compounding gains as savings and interest grow together.

Adapt to Personal and Economic Shifts


Planning is central to effective money management, but flexibility also plays a key role ensuring long-term stability.  Have your circumstances changed?  If so, financial matters may also need attention, calling for adjustments to accommodate new goals.  Are economic conditions dragging-down your investments?  Retooling to reflect financial trends can improve your financial status, helping make the most of your resources.  Common concerns causing changes to your finances:
  • Growing family
  • Job change
  • Economic downturn
  • Layoff
  • Home purchase
  • Unexpected expenses
  • Others…

Financial fortunes ebb and flow, responding to economic influences and other conditions impacting cash flow.  And while some circumstances are indeed beyond your control, there are things you can do to strengthen your finances.  Tracking your spending habits, adapting to changing conditions, and accelerating your savings rate are three ways to start making a difference today.

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