Last Updated on December 18, 2021 at 10:37 pm
Each December, I conduct a personal financial audit. That is, I take stock of ,
- financial goals
- what is the value of my investments for each goal. What is their worth?
- have I invested what I resolved to invest last December?
- Will I have enough to invest for all my goals in the year ahead?
- Review calculations for retirement and all other goals, especially long-term ones.
- insurance and emergency fund needs/expenses
- check if I have any big expenses in the year-ahead
- tax-planning. It is integrated with my financial goals?
- inflation check. How much have my expenses increased?
- any other thing that I should worry about!
This time, I thought it may not be a bad idea (hopefully!) to write a post about it.
Note: This post is not to boast or brag about my financial life. It is to urge to you conduct such an audit yourself. If I don’t put in my story, I will have say, ‘do this’ and ‘do that’. That would sound preachy. My point is to share with you what I do. If you start to do this yourself, I am sure you will come up with a version best suited to you (and better than mine).
![personal financial audit](https://freefincal.com/wp-content/uploads/2016/07/ID-10098847.jpg)
Financial goals
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! 🔥
1. Retirement: This year was a pretty decent year for retirement. Each month, last year I managed to invest 110-120% of my monthly expenses. This year began the same way, but I managed to increase the monthly investment to more than 175% of monthly expenses.
Each year I must increase my monthly investment by about 10-13%, in order to achieve my targetted retirement corpus I am a couple of years ahead of this schedule.
This means that my financial freedom is about 10-12 years away. Pretty decent, considering retirement is 26 years away (at least on paper).
The advantage of investing as much as possible and as early as possible is, if for some reason investments decrease a few years from now, I can simply rely on my new pension scheme contributions and hope I have the health to retire at 65.
This year, I have already reached that stage.
If I can mange to invest at current levels and delay my retirement, my return expectation on my portfolio can be significantly lowered. I know need only about 9% return from equity.
A lot of ifs and buts. Can’t be helped though, that is life.
Asset allocation: Equity 60% (equity MFs) and Debt 40%. No gold, no real estate. Most of the debt comes from my mandatory New Pension Scheme subscription (see here for a performance review) with a little bit of PPF.
If you are wondering how I manage to invest so much, it is because of a frugal life we lead. All credit to my wife for keeping our expenses down.
Calculators used to compute this information
- How much should I save for retirement?
- When can I be financially free?
- Returns estimator for financial goals (used only for retirement)
Verdict: Since a hundred things can derail a retirement plan, this is nothing to cheer about. Try to keep expenses down and hope for the best.
2. My sons education. My son turns 4 in January. After 14 years, he will graduate from School. He will turn 18 before he completes school as got into pre-Kg a year later than others.
Each month I put away about 50-60% of monthly expenses (increasing by 10% each year) for his education in equity MFs and PPF.
Asset allocation: Equity 60%, Debt 40%.
Verdict: As of now I can afford an undergraduate course like a BE/B. Tech. Hopefully I will be able to handle his post-graduate education too, possibly abroad. If he wants to take up medicine, I would need an education loan. We will cross that bridge when we get to it.
Calculators used to compute this information
3. My sons marriage. This year, I started saving for his marriage expenses. Assuming my son would marry at 25, I should have enough for a frugal wedding.
Asset allocation: Equity: 90%, Debt 10%. No gold. Not optimal, but there is enough time , and this is not a high priority goal. So I would like to worry about this later.
Related post: Do not buy Gold ETFs because you need gold for your child’s marriage!
Those are my long-term goals. I don’t have short-term goals at the time of writing. I do have recurring goals, like payment of term insurance, health insurance etc.
Related Calculator: Recurring Financial Goals Calculator
Life insurance and Health insurance
- These are in auto-pilot mode. So not much to do here.
- I have a term insurance from LIC (Amulya Jeevan) and a group term insurance from IITM. Why not cheaper online policies? Why not indeed. Not for me though. Thanks to my Myasthenia Gravis, no one would offer me term policies anymore!
- For the same reason, my mediclaim premium was loaded this year.
Tax-planning
The best advantage of being in the highest tax-slab is one does not have to worry much about tax-planning! Section 80 C is taken care by NPS, Section 80CCD by NPS, 80D by mediclaim, 80G with WorldVision, done.
If you need some help planning your taxes, consult this excellent article by Mr. Narendra Kondajii.
Inflation Check This is the most crucial aspect of this audit. How much have my expenses increased this December compared to last December? Unfortunately, there is an 11% increase. Partly due to inflation and partly due to lifestyle expenses – mainly medicines for my Myasthenia.
These days I don’t do a monthly budget. I make sure I invest enough for all my long-term financial goals and use the rest for expenses.
As a result, within a few days after I receive my salary, my SB account has a low balance. Which is why I have not been contacted by any relationship manager!
How about you? How often do you take stock of your goals and expenses?
Here is an integrated financial plan creator to evaluate your fiscal fitness. This is the perfect time to take stock of your finances, plan and invest accordingly.
If you are interesed in knowing more about my personal financial journey: The Financial Arrow of Time
🔥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!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
![Follow Freefincal on Google News Follow Freefincal on Google News](https://freefincal.com/wp-content/uploads/2023/07/Follow-Freefincal-on-Google-News.jpg)
![Subscribe to the freefincal Youtube Channel Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.](https://freefincal.com/wp-content/uploads/2023/07/Subscribe-to-the-freefincal-Youtube-Channel.jpg)
![Follow freefincal on WhatsApp Channel Follow freefincal on WhatsApp Channel](https://freefincal.com/wp-content/uploads/2023/09/Follow-freefincal-on-WhatsApp-Channel-300x83.jpg)
![Listen to the Lets Get Rich with Pattu Podcast Listen to the Lets Get Rich with Pattu Podcast](https://freefincal.com/wp-content/uploads/2023/07/Listen-to-the-Lets-Get-Rich-with-Pattu-Podcast.jpg)
![Lets Get RICH With PATTU podcast on YouTube Lets Get RICH With PATTU podcast on YouTube](https://freefincal.com/wp-content/uploads/2023/08/Lets-Get-RICH-With-PATTU-podcast-on-YouTube-644x362.jpg)
- 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 using 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!
About The Author
![Pattabiraman editor freefincal](https://freefincal.com/wp-content/uploads/2019/11/Pattabiraman-author-freefincal-article-bottom.jpg)
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 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 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!
![Both boy and girl version covers of Chinchu gets a superpower](https://freefincal.com/wp-content/uploads/2021/02/Article-bottom-Chinchu-gets-a-superpower-front-cover-for-girls-and-boys.jpg)
![Feedback from a young reader after reading Chinchu gets a Superpower (small version)](https://freefincal.com/wp-content/uploads/2021/02/For-bottom-Feedback-from-a-young-reader-after-reading-Chinchu-gets-a-superpower.jpg)
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!
Do you 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 & its 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
![You can be rich too with goal based investing](https://freefincal.com/wp-content/uploads/2016/11/You-can-be-rich-243x300.jpg)
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
![Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want](https://freefincal.com/wp-content/uploads/2017/05/2-mini-Cover-pink.jpg)
Your Ultimate Guide to Travel
![Travel-Training-Kit-Cover-new](https://freefincal.com/wp-content/uploads/2019/11/Travel-Training-Kit-Cover-new.jpg)