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As the year comes to a close, it's time to reflect on your financial journey. No matter where you are on the financial ladder, understanding where your money went and why is vital. In this article, we'll walk you through six key questions to help you assess your financial stability in the past year.

Question 1: Did You Achieve Your Financial Goals?

Take a moment to list your financial goals from the past year and assess whether you managed to reach them. It's essential to break these goals down into smaller, manageable steps to see if you've made steady progress. If you find that some goals weren't met, consider the reasons behind it. 

Tip for the upcoming year: Set SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound) to stay focused. Click here to read more about Goal Planning.

Question 2: How Did Your Income Change?

Understanding changes in your income enables you to adapt to shifts in your financial situation and make informed decisions. Start by comparing your income from the past year to previous years and analysing the factors behind it. This will provide you with insights into your income stability and whether you're moving in the right direction. 

Tip for the upcoming year: Look for opportunities to diversify your income sources to increase stability.

Question 3: How Did Your Expenses Evolve?

Monitoring your expenses reveals where your money is going, allowing you to make necessary adjustments. Review your expenses from the past year, categorising them to see where you've allocated the most funds. Pay special attention to any unnecessary or excessive spending. This will guide you in creating a more effective budget for the upcoming year.

Tip for the upcoming year: Create a budget and stick to it to ensure your expenses align with your financial goals.

Question 4: Did You Save or Invest More?

Saving and investing provide you with financial security and the potential for future growth. Compare your savings and investment accounts from the past year to previous years. Have your balances grown, or have you remained stagnant? Assess your contributions to these accounts. This will help you determine whether you're on track to reach your financial goals.

Tip for the upcoming year: Automate your savings and investments to ensure consistency.

Question 5: How Did You Manage Your Debt?

Understanding how you handled your debt in the past year is key to maintaining a healthy financial outlook. Review your outstanding debts, such as loans, credit card balances, or mortgages, from the past year. Develop a plan to tackle high-interest debts and avoid accumulating more debt in the upcoming year.

Tip for the upcoming year: Create a plan to pay down high-interest debts and avoid taking on more unnecessary debt.

Question 6: What Will You Do Differently Next Year?

Setting a clear path for the upcoming year ensures you can continue working toward your financial goals effectively. Take some time to think about the lessons you've learned in the past year. Consider what you could have done differently to improve your financial situation. Then, set a clear financial strategy for the upcoming year. 

Tip for the upcoming year: Set a clear financial strategy for the upcoming year, with actionable steps to reach your goals.

Remember, financial stability is a journey, not a sprint. It's a path filled with choices, experiences, and growth. Each informed choice you make, every lesson you learn, and each adaptation in your financial plans brings you closer to financial freedom. By asking these questions and taking control of your financial future, you're paving the way for your financial success.