For our household, this month marks a significant milestone. We decided to kickstart healthier habits, tighten our financial belt, and enjoy life as a larger family starting September 1st. Even though we're nearly three-quarters through the year, it's never too late to recalibrate various aspects of our lives—especially when it comes to managing our finances.
With the arrival of our newest addition, our usual budget took a hit. We found ourselves ordering more takeout meals, making last-minute purchases for the baby, and perhaps even splurging on some toys for our older child. While these moments were heartwarming, they also meant we had to reassess where we stand financially.
I've put together five key benchmarks you can use to evaluate your own financial health:
Monthly Budget
No matter how you keep track of your spending, now is a perfect time to review the past few months. If you're consistently dipping into your savings, it might be time to adjust your spending strategy. Cutting back doesn't have to be overwhelming; there are plenty of simple ways to reduce monthly costs. Check out some practical tips here if you need inspiration.
Savings Plan
Whether your goal is to save for a short-term emergency fund or a long-term dream, it's important to regularly check your progress. If unexpected expenses have eaten into your savings, consider making up the difference before the holidays arrive. If you haven't set any savings goals yet, don't worry—it's not too late! You can start fresh with a new plan for 2024.
Net Worth
Your net worth is a valuable indicator of your financial standing over time. I personally find it useful to calculate this metric every six months to a year. While some people prefer to do it more frequently, waiting a bit longer often allows you to see more substantial growth. Either way, tracking your net worth provides clarity about whether you're moving toward or away from your financial goals.
Holiday Budget
We all know the holidays can wreak havoc on budgets! To avoid overspending, our family sets an annual holiday budget each January and starts saving accordingly. If you haven't begun planning for the holidays yet, we offer a straightforward holiday budget spreadsheet that you can download and customize.
Investment Accounts
From 401(k)s to 529 college savings plans, investment accounts should be reviewed periodically—ideally every few months. Many people assume their investments are automatically managed without needing much oversight, but checking in ensures everything is still aligned with your goals. Reviewing your portfolio gives you the opportunity to rebalance if necessary and stay informed about market trends.
If you realize certain parts of your financial strategy aren't working as intended, address them promptly. There's no need to dwell on what went wrong—just focus on moving forward with a revised plan for the remainder of the year. Taking action now is far better than delaying until later.
Life is unpredictable, and so are our finances. By staying proactive and regularly reviewing these benchmarks, you'll be better equipped to handle whatever challenges come your way. Remember, small changes today can lead to significant improvements tomorrow!
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