According to a Pinkfolio‘s recent survey, 67% respondents wanted to assess their finances and set goals on their own before sitting with financial advisors or having a conversation with family members. With a new year, this might be the best time to take action. Assessing your finances will definitely function as the foundation to set your financial resolution for the new year.

Before we begin your financial assessment of the previous year, write down what goals you have in your mind first, then compare them after reflecting the assessment result.

Why your financial assessment of the year matters:

  1. Knowing where your money was from and where it went will guide you about what you can do (e.g. Did you overspend on “wants” or have a poor return on investment?)
  2. If you know what to do, you can set clear goals with numbers & dates (e.g. cutting down spending $100 per month on shopping and going out, updating my portfolio to 2% increase return on investment)

You will need to do it anyways for your tax filing in April. Do it now, and save pain later. You know you don’t need to wait until T4.

Step 1. Gather data & tools to organize cash flow history

You need all your data gathered in one place even if you may not use all the time-consuming details. Online banking is useful since you can view all your statements in one place, and even download them for your offline records. Using automatic tools such as Mint are great, but it takes time to customize data and fix any errors. It is certainly painful to organize cash flow, but is needed if you’d like to make solid decisions based data and your true financial situation.

1. Gather your data in one place, including:

  • Bank statements
  • Credit card statements
  • Receipts
  • Invoices
  • Book (if you have one)

2. Choose a template to input numbers.

You can make it on your own with excel, Google sheets, or other paid tools, but the best free tool so far is:
FCAC budget calculator
(It’s a user-friendly budget tool, but can be used to reflect cash flow. You can start inputting numbers online, then download the excel template to refine numbers)

* One recommended way: Choose a simple template and enter your income and fixed costs (housing, transportation, insurance, etc), then refer to the statements or Mint to estimate approximate variable cost. Items such as grocery cost of course vary every month, so having an approximate number should be sufficient. Items that need more attention are your spending on “Wants” such as vacations, eating out, or seasonal shopping.

3. Come up with your monthly & yearly cash balance (=income – saving – spending)


Step 2. Reflect on your pattern

1. Is your monthly & yearly balance minus or plus?

The numbers are telling you whether you are living below your means or not. Consistently living above your means will cause financial trouble. Numbers are simple – You either earn more money or spend less.

2. How do I know I am managing my budget well? Refer to conventional recommendations for budget allocation.

Remember, the budget allocation should be customized for individual needs. Take a look at how a household allocates their budget by income level.

3. Rate your decisions: major spending, investment decisions, saving habits

With all your numbers, you can review major numbers to make a decision for next year.

  • Spending: Was that 5 day vacation really worth it?
  • Investment decisions: Did it bring you expected return? How would experts review your chosen product?
  • Saving goals: Did you have any goals? Were you on track? Are you using automatic contributions?


Step 3. Set clear & achievable financial resolution.

1. Confirm your financial goals.

Go back to the financial goals you set before assessment and check if they are still the same after reviewing conventional budget allocation (e.g. You thought your only issue is not making enough money, but it turns out you had paid much more than average for your multiple vacations)

2. Choose the best strategy to improve your finance in the new year.

The key is not downgrading your lifestyle right away, but starting small with things you can do now. For example:

  • Set deadlines for the small things you can do NOW (setting up an automatic saving contribution, starting RESP plan, setting up a call to go over your insurance coverage…)
  • Increase your income (getting a raise, additional income, or investment return)
  • Allocate income differently (e.g. reduce spending on “wants”, tips for seasonal shopping)

3. List expected major life events related to personal finance in the new year and be prepared.

  • Consider putting money aside in advance for major events (vacation, wedding, children, education etc)
  • Apply for eligible loans in advance to get the best deal
  • Search for any tax deductible options based on your financial statement


Finally, keep your financial resolution on track

Now you probably have a better idea about what you should do. However, it is simply easier to be said than done, just like a diet –No pain no gain.

  1. Create more opportunity to expose yourself to personal finance
    (attend information workshops & meet-up groups, register for a online course etc)
  2. Set a date every month at least to track your progress
  3. Invite yourself to Pinkfolio

At Pinkfolio, we are creating a mobile + web app that provides 10 minute training to improve your financial health. We connect financial training with habit changes as well as goal tracking to keep your financial resolution on track.

Get early access to Pinkfolio