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Personal Finance Audit Checklist: 7 Steps To Understand Your Money

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A personal finance audit can help us gain an understanding of our current money situation, as well as help us dream up long-term goals. Read on to get our personal finance audit checklist so that you can better understand your dinero.

Personal finance Audit Checklist: 7 Steps to understand your money

If you are new to the world of personal finance and managing your money, perhaps you’ve never done any sort of personal finance audit. Maybe you’ve committed yourself to learning about all things money or have even started this learning journey—but now face your own money with confusion and dread.

This personal finance audit checklist will walk you through what you need to complete the first of hopefully many personal finance audits.  The checklist is straight forward, but this WILL require you to invest some time! A personal finance audit is helpful in giving you the big picture of your past, present, and future money flow. As first-generation wealth-builders, the more we can do to ensure our success, the better. Conducting an audit and having this set of information will also guide you as you create your SMART dinero goals for the year.

1. Gather Your Account Balances

First on our list is to gather all of our assets, aka things like your checking accounts, savings accounts, and investment accounts. We are doing this to try to identify what your total cash and investments are. Some of your assets might be in cash and easily accessible, others might be inaccessible until a certain age, such as the growth in your retirement accounts. Total these accounts up.

2. Gather Your Debt Balances

Now we are gathering our liabilities, or things like credit card debt, personal loans, student loans, etc. Right now you are only writing things down. Take each of your debt figures, jot it down, write the corresponding interest rate and minimum payment. We will come back to these numbers later.

3. Check Your Credit History

We know the credit reporting industry isn’t fair. Racism, sexism, and, really, all the ‘isms have made the credit score a poor measure of financial health.

But if we do not know anything about this industry, we continue to let it take advantage of us. Your credit score dictates things like interest rates on loans, the kind of properties you have access to, and your access to credit.

Some banks give you constant access to your credit score (Discover and Capital One are two examples). These scores are enough. But for an in-depth credit report— or if your bank does not offer one—visit, which is promoted by the FTC. From now through April 2022, you can get free weekly credit reports.

Jot down your number and the different points that are impacting your score.

4. Outline Your Expected Income

Now we are starting to get into your weekly or monthly cash-flow, which will help in concretizing your financial goals. Jot down what your net weekly or monthly net income is, whichever you prefer or is aligned with your pay schedule.

5. Reassess Your Debt

By gathering your total assets (Step 1) and your total liabilities (Step 2), you are calculating your net-worth. If you have far more debt than you do assets, maybe it’s time to consider a debt payoff plan. Or maybe your net-worth is actually lower than you thought it would be.

Personal finance is personal. But one thing that remains consistently true: interests rates above 10% are toxic!!! Now consider that most credit cards have an APR (interest) of at least 16% and you’ll understand why your credit card debt is toxic debt. Toxic debt is considered toxic because it eats away at your money. Paying the minimum is not enough. In Episode 66 with Cindy Zuniga, for example, from a total of $24,000 that she paid in one year on her student loans, only $4,000 of that went to the principal amount. The remaining $20,000 was all considered interest payments. That debt was toxic!

Look through your interest rates and highlight the ones you see as very toxic. Use this calculator to see how much interest you would pay for your credit card balances, and use this calculator to see how much you’d pay in interest for loans.

From here, are there any debts you want to start developing a plan to pay off? Check out our piece on the difference between the snowball method and the avalanche method of debt payoff to find out which one is best for you.

6. Reassess Your Savings

When gathering the total amount in assets you had, how much of that was in cash that is easily accessible? If most of your assets are in inaccessible funds, it may be worthy to consider developing or fluffing up an emergency fund. If COVID-19 has taught us anything, it’s that we need to be prepared for emergencies.

Apart from this emergency fund, do you have any savings goals? Do you have any big expenses coming up that you’d like to start saving for? Take some time to create a list of all the ideas you want to save for.

7. Create Your Financial Plan

Now that you have all your numbers gathered, as well as some decision points on debt payoff and savings goals, it’s time to start developing a financial plan. This plan should include:

  • Income after necessary expenses, including debt minimums
  • Amount of cash left over to work with
  • Debt payoff plan of attack
  • Savings goals
  • Age of retirement (or financial independence)

Integral to this financial plan is understanding your why. Going from 0 to 100 is going to require commitment. Keeping your why close to heart is what will continue pushing us forward.

Conducting a personal finance audit sounds intimidating. It doesn’t have to be that way. While there are other models for conducting an audit that is much more in depth, we created this introductory guide with beginners in mind. Our personal finance audit checklist is straighforward, but it WILL require you to invest some time into it. Remember: invest in you, always. Happy planning!

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Meet Jannese

Jannese Torres-Rodriguez is a award-winning Latina Money Expert, Educator, Speaker, Writer and Business Coach. She became an accidental entrepreneur after a job loss led her to create a successful Latin food blog, Delish D’Lites. Now, she helps her clients and listeners build successful online businesses that allow them to pursue financial independence and freedom.

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7 Responses

  1. I love your podcast and blog. Thank you for putting all this information out there for all of us. I love all the people you’ve had on. I feel like I’ve learned a lot and can totally relate to your topics. I own 2 rental properties and my purchased my own home as a 1st generation US born American. You don’t hear these topics and they’re sooooo important. Thank you for your example your an inspiration.

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