Last Updated on September 4, 2018 at 9:59 am
I usually love December. The Chennai Summer is busy recharging its batteries and therefore not in full force. The Carnatic music season seems to begin earlier each year, thanks to some prudent marketing. The semester is over, and for me, goal-based investing month starts! Dec 2015 was unique because of the Chennai floods!
Most of what little I know about personal finance and investing comes from time spent staring at Excel sheets in December. All my retirement and goal-based investing calculators were done in December as I evaluated my goals and future cash flow.
In December, I do a personal finance audit. That is, I take stock “where I stand” wrt
- insurance (not much to do if one already has suitable insurance policies)
- goal-planning
- How far away is my financial freedom: Retirement Planning: My Story So Far
- progress of my son’s education goal
- tax-planning
- review how much I have invested and try to make up for any shortfalls
- take stock of how my expenses have increased and why
- be prepared to invest more in the coming year: I try and increase investments for long-term goals by about 10%
Previously published financial audits
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! 🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
The 2013 personal financial audit
The 2014 personal financial audit
This year, I invite you to audit the action in your financial castle with me. I shall post a simple evaluator to grade an audit. In this post, how to conduct such an audit is discussed.
If you do not have term life insurance, health insurance and emergency insurance, then getting them are the first steps. These posts may help:
Action: How to choose a term life insurance provider in 30 minutes! Remember Claim settlement ratio does not matter if your life insurance policy is at least 3-years old!
Follow up: Things to do AFTER you take a term insurance policy!
Action: How to Buy a Mediclaim cover or Health Insurance Policy
Follow up: Things to do AFTER you buy a health insurance policy
Once these are in place, we can proceed to the most important part of the audit, which is to find out if we am on track with respect to our long-term financial goals. Much of this audit process has been completely automated with these tools (and can be done any day of the year):
- I keep track of investments with this monthly tracker
- Track fund holdings, portfolio health and goal progress with Automated Mutual Fund and Goal-based Investment Tracker
- PPF Tracker
- Get a perspective of future cash flow with the integrated financial planner
If you have not done this exercise, do try it. It will change the way you think about money. You could feel more secure and hopefully in control. It would definitely tell you where you stand and where you need to be (if you are not there already).
At the cost of sounding presumptuous, may I suggest that you treat this post as acall to action and try out the above tools?
If you are interested, here is what you will need:
- 60 minutes of peace and quiet.
- A notebook and pen and of course a computer hooked up to the internet.
And this is what you will need to do:
- In the notebook, date a page and list all possible short-term and long-term goals.
- Enter the approximate current cost of each goal. If you don’t know it off-hand, source it later.
- With this information, play with the Visual Goal-planner Hopefully it would help you understand the importance of inflation and how to beat: either by investing enough or by earning large enough returns.
- Collection all relevant information regarding your investments and savings: SB accounts, FDs, RDs, PPF, EPF, Gold, Stocks, mutual fund holdings, bonds, insurance policies etc.
- You are now ready to use the integrated financial planner. As you explore the entries, if you need help with planning long-term goals, you can consult: A Step-By-Step Guide to Long Term Goal-Based Investing
- Take a few days to study and understand the results of the integrated financial planner. That will tell you how much you need to invest and how much you can invest …. this year and in all future years up to retirement.
- This should give you some idea of achievable your financial goals are. You don’t need to take the results of the planner as Gospel. As long as you strive to invest as much as you can and keep expenses at check, you would be fine.
- The next step is to tag your existing and future investments or savings with long-term or short-term goals and enter that in the monthly tracker
- You can use the above-mentioned PPF and mutual fund trackers if you wish.
- If you have not integrated your tax-planning with goal-planning, now would be a good time to do so. Here is a smart way to go about it:Making the best use of section 80C for tax saving: an example
- Write down important conclusions in the notebook.
- Repeat steps 1-10 once a year.
- Steps like changing investments, rebalancing etc have not been discussed here. If these steps are followed, my guess is that you would know what to do with your investments because you now set your sights on the only benchmark that counts: your financial health.
- I will provide some more details on this when I post my personal finance audit.
If you need help with any of the above steps, you can contact me and I will be happy to provide generic help.
Happy Auditing!
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter with the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu gets a superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it's content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)