Reviewing your personal wealth and finances helps to gain perspective on how you use your money and how wealthy you actually are. It’s also a good exercise in letting go of things you don’t need and thinking about what is truly important. Here are three reasons why reviewing your personal wealth & financial situation is essential:
1. Think about what is truly important.
Reviewing your wealth is a good exercise in letting go of things we don’t need and thinking about what is truly important.
If you need help determining where your money is going, it’s time to take stock of your financial situation. Knowing how much money you have, how much debt you have, and where it’s coming from will help shape the rest of your life.
This can be difficult because sometimes you think you might need something for you or your family members that is currently not affordable. For example, you might want a new car but the old one would run for a few more years.
Not spending money on a new car could enable you to put that money towards something that’s more important, ie pay off credit card debt or make more mortgage payments. Both are more sensible to build your wealth and then use it more intentionally to reach your life goals.
2. Build your money mindset
A review is a great way to build your money mindset, which will help you be more intentional with money, time, and maintaining good health. Spending money that you really don’t have but source from loans or credit can be a big burden on your mind.
For example: If you’ve been spending money on discretionary items without giving it another thought (e.g., a takeaway coffee every morning), then a review can be an opportunity for self-reflection and change. Habits are generally not easy to break, but a worthwhile financial goal could inspire you enough to change them, at least for a while.
After all, the money you might spend on takeaway coffee adds up over the year. There might be other items you find you’re spending money on that you could save towards your goal, eg an online subscription you’re not really using.
Reviewing your finances shines the light on how you think about and use your finances. It’s only when you know the truth about your money that you can make sensible changes to your spending habits.
3. Discover opportunities to improve your financial situation
By reviewing your personal wealth, assets and liabilities, you can discover areas where you could be spending your money more intentionally, in line with your goals. Equally, it could reveal opportunities to build your wealth instead of accumulating debts through loose spending habits.
You could also use knowledge you have from others who have a similar expense to assess how you might change your spending. If an expense item on your credit card statement seems unnecessary or excessive compared with similar items from other people at work/school/etc., it could be time to cancel or change the level of expense commitment.
If you have a financial advisor they can also help you find ways to restructure your expenses and align them with your goals. More importantly, they also have tools to easily project into the future how a small or structural change in how you manage your expenses can build your wealth. Numbers don’t lie.
Conclusion
The most important thing is to take action on the insights you gain from your review. But don’t forget to keep it fun! Instead of feeling like a chore, consider the process an opportunity to help you see hidden or unnoticeable aspects of your life. Don’t get caught up in trying to fix everything all at once—take it slow and feel out what works best for you.
For some inspiration and ideas how to conduct a review of your finances, we’ve go a free eBook for you that will give you a more in-depth guide to taking control of your finances. You can download Building a Fortune for the Future here.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
