First quarter: How are your finances faring?

trueBy Sylvia Juuko

Three months into the year, the euphoria has died down and reality has set in. Now would be an opportune time to do your first quarterly review of your finances.

It may feel like a daunting task but it is a key aspect of prudent financial management. It forces you to put into perspective your intentions for the the year.

Quarterly reviews are crucial because you can adjust your plans by taking into account any eventuality or emergencies that you hadn’t anticipated and work out ways to get back on course if you are totally off track.

To meet your financial goals, you have to look at your income vis-à-vis the spending plan. Remember, you cannot make any grand plans regarding an income you do not have.

You have to be realistic about your financial status and match that to your spending plans. If you anticipate any inflows in the future, they can be considered as a bonus for your plans. A review helps you ascertain whether you are on course or not in terms of your projected expenditure per day, week and month.

The next important item to consider under review is the saving. Many people plan to do this but when it comes to implementation, excuses abound. Review the causes of your set back in this area.

On the other hand, if you have met the savings goals, you may need to consider revising your percentage of saving upwards.

Another dicey area to review is your current level of debt. For anyone with debt for financing consumption, committing to reduction during a new year is a popular declaration.

However, if you have made borrowing an escape route to finance your budget deficit, undertaking a drastic change may prove a challenge.

Nevertheless, you can still make debt reduction a major goal for the year and try not to incur more, particularly for consumption.

On the other hand, if you made plans to acquire debt to finance investment, you have to consider the cost, repayment period and what level of income is available to finance its repayment. Therefore, adjust your plan accordingly, having in mind the advantages and risks of incurring this debt.

Related to this is the review of the performance of your investment portfolio. If you set up a business during this quarter, or you are reviewing a business that was set up earlier, how would you rate the performance?

Are the losses so high that it is becoming untenable?

These are the issues that you should consider in your review. If your business needs some cash injection, how will you source for those funds?

Regarding income, have you made any headway in expanding your earning capacity in line with your goals?

This is an area that needs addressing in case you are still in the same income bracket. Related to this, you need to think about the future and the kind of lifestyle you want to lead.

If you are entirely depending on your mandatory savings, project and see if those savings will support the lifestyle you want to lead, several years from when you can access those savings.

Are those savings enough? Can they support the lifestyle you want to lead in the next 10 years? How do you need to deploy your resources to accumulate assets that can support your future lifestyle?

Remember that any financial decision made today has a bearing on your future.

Ultimately, if you have failed on most of your goals, you need to recommit to getting back on track. Choose the priorities for the next quarter and how you intend to achieve that.

Remember that despite the quarterly reviews, your plan should cover short and medium term goals.

The writer works with Bank of Uganda