Have you evaluated your financial situation lately? If you have money in investment and  saving accounts, it might be time to get out the calculator to see where you stand financially. If you do not know where you are, you can’t possibly know where you’re going.

Procrastination always leads to financial trouble later in life.  Addressing your financial issues now can make the difference in how you live in the future. There is more to a money health check than knowing how much you have in your accounts. You also need to know where your money goes and how you might be wasting it on things that don’t help you reach your intended financial goals.

Where do you start?  Track expenses.

This not only involves major expenses but minor expenses as well. Major expenses are easy to track. You can easily track your mortgage, utilities, car payments, insurance, credit card and loan payments through monthly bills and receipts.

If after tracking your expenses, you find that you’re living close to the edge, then performing your own internal financial audit is in order.  Things change and you may need to adjust the amounts.  For example, if your car payment is too high, you may need to purchase a cheaper one or refinance the loan.  The same goes for car insurance or homeowners insurance, cable and phone bills.

Of course, the first thing you should consider is your credit card debt. If you are accruing more debt each month rather than paying it off, you will regret it later. In short, stop it.  Don’t use credit unless you are in an absolute emergency.

For most people, tracking daily expenses is harder than regularly monitoring monthly bills. Many things eat into your cash flow, including ATM fees, daily sodas and coffee outside of the home and the cost of dining out. A $2 coffee three times a day adds up to almost $200 a month. That money could go into one of your saving accounts.

That Nasty Word – Budget

No one likes to live on a budget, but for most people it is the wisest thing to do. If you do have to purchase items while you are away from home, budget for them. For example, you may have to take coffee and lunch with you when you leave the house.

If you spend money on in-home entertainment and full-package cell phone services, you may be able to trim some of that back to set aside more money.

The Main Purpose of the Financial Evaluation

This financial checkup, should be done annually and allows you to put more money in your pocket now while making sure the money you do save is going into the right places. During this evaluation, you should also be looking at your investments. You may need to adjust these every year so you have the allocations of money in the right places.

You may also discover that the amount you are investing will not get you to your goals as you had hoped and that you need to start investing even more.

Don’t make the assumption that this assessment of your finances is unimportant if you don’t have a high income. It is important. In fact, it is even more important because every dollar is crucial to your financial well-being.

It determines how much you can put into your saving accounts. If you make enough money so that you don’t have to budget your spending, it’s still important to redistribute your investments.

This was a guest post.