Taking Charge of Your Financial Life

Every year at this time, I like to take a step back, and do an audit of sorts on my financial activities for the year gone by. 

This is something everyone should do at least once per year. It doesn't have to be in December - you could be reading this article at any time of year, and there's no time like the present.

The only requirement is to set aside enough time so that you can properly assess everything. A regular two-day weekend can be sufficient. It's tempting to skim past the uncomfortable parts of this process, but that's where the most important lessons lie. If you don't allow enough time to work through this process, you won't get the full benefit from it.

Here's the simple, three-step process that I follow each year; I hope you find it as helpful as I do!

1. Compile a list of the major financial decisions you made this year. 

Did you make any major purchases, such as a house, a car or other large asset? Or did you sell any of these large assets? Did you rent an apartment? Did you change jobs, or start a business? Did you make an investment decision, such as moving money from one fund to another? Did you lend anyone money (or take out a loan)? Did you pay down a significant amount of debt? Did you start budgeting for the first time?

These are just examples; a "major" financial decision is one that had a significant impact on your life - it doesn't have to be a large dollar amount, nor does it have to be something that took a lot of time. If it feels major to you, write it down.

2. Look at your list and decide whether it had a positive or a negative outcome for you. If the transaction is still in progress, base your answer on how you currently feel about the decision.

For each decision that you feel was positive, write down what went right, and why. Did you do your research first?  Did you consult with an accountant or financial advisor?  Was it just blind luck that it turned out? Did this decision make you feel more in control of your money?

For each decision that you feel was negative, write down what went wrong, and why. Did you ignore the feeling in your gut that was telling you this wasn't a good idea? Did you spend money you didn't have? Did you rush the decision? Did it make you feel guilty or give you a sense of unease?

Remember, too, that it's possible to take every precaution and do everything right, and still have a bad outcome, when it comes to certain financial choices. For example, there is always an element of risk involved when it comes to investing in equities, so if you bought a share of a mutual fund and it went down in value after your purchase, that's not necessarily something you could have foreseen or changed.

The purpose of this step is to learn the lessons from your financial activities this past year, so that you can improve your decision making for the future, and not repeat the same mistakes over again.

3.  Set some goals for the next 12 months.

Use the lessons that emerged in Step 2, and make a list of three or four things you'd like to focus on in your financial life for the coming year. 

For example, if one of your "bad" decisions was buying items on credit without being able to pay off the full balance when the bill came due the following month, then a goal to set for the coming year might be, only use the credit card when I have the money already set aside to pay for the item. 

I'm a big believer in not biting off more that you can chew. There's a reason I suggest only setting three or four financial areas of focus; any more, and it will be very difficult to stick to any of them. You know yourself best, and if three or four is too many, by all means, stick to just one or two.

Once you have your list of goals, put them in places where you will be sure to see them. Put a post-it note on your bathroom mirror. Create a vision board that encapsulates them and keep it in front of you in your home office or creative space. You can even create a desktop wallpaper for your computer that has your goals on it, using any simple graphics software!


Going through this process annually, I find, gives me a sense of increased command and control over my financial life. Each year, I take what I've learned and resolve to improve my financial decision-making, and gain increased financial security as well. I hope you find this process as helpful as I do.

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