Here’s welcoming you to the end of the 1st quarter of the year 2021.

As is customary globally, many organizations would be reviewing their performances over the past 90 days and charting a course of the next 90. As such, there is nothing that should stop individuals too, from doing likewise.

I am sure some of us may be wondering why this is necessary; but the truth is that what is not tracked cannot be measured accurately.

Some years ago, during an interview; Warren Buffet was quoted as admitting to tracking down a $4 entry in his tax return – which turned out to be a royalty payment. It seems to me that if Warren Buffet can be bothered about $4 or N2,000 in Naira terms, you and I can take the time to carry out a financial review.

A major benefit of a quarterly review is that provides enough information to carry out a review of one’s finances – revenue, expenditure, savings and investments. It also guides one’s future outlook regarding the financial goals already set for the year – are they still relevant, do they require adjustments or is there any new financial priority or concern to be provided for (an increase in school fees for example).

This week, we will be looking at actions steps required to carry out a personal quarterly financial review. In carrying out a review exercise, the following steps should be followed:

  • Draw up your personal net worth statement as at March 31st: your assets and liabilities. Pay particular attention to the movement of the balances; are they growing or reducing or unchanged.

If the assets have grown, then good for you; the emphasis should be to ensure that the areas of growth are optimized. If it is the liabilities that have grown, then you need to understand why and think of realistic steps for changing the situation. If unchanged, especially at a time like this; you need not fret given raising inflation and cost of living. You however have to then focus on growing income streams not matter how small.

It is recommended that you compare your net worth statement with the next most recent one to properly assess your overall performance. In the event that this would be the first time of carrying out this exercise, this position should then be used as the basis of carrying out subsequent reviews.

  • Audit your monthly expenses: A review of your expenses will determine where or how you are spending your money. It will also help determine whether or not your spending is under control or not.

The emphasis here should be the costs which can be further adjusted for efficiency. Even though it should be stressed that cost cutting may not necessarily make you wealthy, it eliminates wastage which is one of the bedrock of financial prudence. 

  • Track revenue: The point here is to ensure that all the income available or accessible to you are adequately converted. Examples of such income are dividends, interest or commission earned. The aim here is not to leave any funds on the table and to convert such to investments.
  • Review your savings and investments: The quarterly review should be to ascertain that you are on track to meet your savings and investment target for the year.

The aim is at by the end of Q1, you should have reached the 25% mark of your set targets or close to it. If you are on track, well done! If not, you may need to find out why and how you can catch up.

It is also the best time to check on well your investments are faring, and also the time to consider which investments to continue to build, those to liquidate or just stay action on for now.

That said, for those investments being held with a long term view, three months is too short a time horizon to take any hasty decision; you may just want to ride the tide.

As you do this review, do ensure that you refer to the goals set earlier in the year. Pat yourself at the back for the areas you have done well and propose to do better in the areas where you are lagging behind. The final step will be to ensure that you diarise the date for your next quarterly review.

Please ensure that you continue to keep safe and well. Till next week, take care.

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