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Why You Should Be Doing a Quarterly Review

Your personal expense plan is most likely set up on a monthly basis – the majority of your bills (credit card, mortgage, electricity) are monthly, and your income most likely comes monthly or biweekly. Also, if you’ve been keeping up your expense plan for a while, you most likely already spend some time each year looking back at how your investments performed and how much you were able to put away as savings. But what about your plans over the next several months – how can you track those?

Consider corporate budgets, which are reviewed monthly, quarterly, and annually; for publicly traded companies, official financial statements are released to the SEC for each quarter and year. This perpetual cycle of aggregating, analyzing, and releasing financial information forces companies to keep their budget plans squarely in focus, and it allows them to regularly view how they are doing versus short-, medium-, and long-term financial goals.

You can see the value of applying a similar, if slightly less complex, practice to your own financial planning. A review of your spending and saving every three months is a great way to do 3 things:

  1. keep track of how you are doing on your goals
  2. make sure that your budget still accurately reflects your monthly expenses
  3. add flexibility to your goal-setting

Generally, a quarterly review helps you analyze your finances because, while one month may be unusually expensive, three months of data will represent a pattern.

Relying on the calendar year as the start of your quarterly cycle, then, the end of First Quarter 2009 will be March 31st. Plan to set aside a little bit more time than usual at the end of this month, and when you examine your monthly budget, take a look at January and February as well. Were any expenses consistently higher than you had predicted? Were you able to save more or less than you planned? Are you now 25% of the way towards your year-end targets?

Once you’ve analyzed the first quarter, take a few minutes to set some goals for second quarter. These goals can be whatever you like, from reaching a milestone in your annual plan to saving up some extra cash to spend on your summer wardrobe.

What are some goals you could set for next quarter?

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