Step 1- How to Build Wealth in 2025 🚀
Missed the last post about How to Win With Money in 2025? Read it here: How to Win With Money in 2025
How to Conduct a Financial Audit- A Step-by-Step Guide
A financial audit is the foundation for taking control of your money. It gives you a clear picture of where you stand and sets the stage for better financial decision-making. Here’s how you can conduct a thorough audit and start 2025 on the right financial foot.
Step 1: Log Into All Your Accounts
Begin by logging into every account where you either have money or owe money. This includes:
Credit cards
Student loans
Mortgages
Checking and savings accounts
HELOCs (Home Equity Lines of Credit)
Retirement Accounts 401(k), 403(b), Roth IRA, Traditional IRA
Any other places you owe money/have money stored
If you don’t have login information for certain accounts, contact the service provider to reset your credentials. Make sure to securely store all your login information in a password manager or another easily accessible, secure location.
Step 2: Write Down Your Numbers
Once you’ve accessed all your accounts, record the numbers in one organized location. Create two sections:
Assets: Include everything of value, such as checking/savings balances, investment accounts, retirement funds, and tangible assets like your home or car.
Debts: List all liabilities, including credit card balances, student loans, mortgages, and other debts.
Having all your financial information in one place gives you a comprehensive snapshot of your net worth and areas needing attention.
Step 3: Analyze Spending
Review every expense from your checking account and credit cards over the past 90 days.. Pay special attention to:
Forgotten subscriptions
Overcharges or billing errors
Excessive discretionary spending
This exercise often reveals surprising spending patterns and unnecessary costs. Take immediate action to cancel unneeded subscriptions and dispute any inaccuracies.
Are You Spending More Than You Make In a Month? Here Are Some Warning Signs:
Credit Card Balances Increasing: If you’re using credit cards to cover everyday expenses or making only the minimum payment, you may be overextended.
No Savings Growth: If you’re not saving consistently, it’s likely because your income is being stretched too thin.
Constantly Borrowing or Transferring Funds: Frequently transferring money between accounts or borrowing from friends/family indicates cash flow issues.
Step 4: Check Your Credit Score
Monitoring your credit score is a vital part of your financial health. Visit CreditKarma.com to create a free account. This service provides access to your credit scores from two major credit bureaus and details about your current credit accounts. Regularly monitoring your credit score helps you spot potential fraud or changes that need attention.
Step 5: Make a Plan
What do you want to accomplish by the end of 2025? If you have completed the steps above you should have a complete view of your current financial situation.
Use the insights from your financial audit to create a plan for 2025. Complete all of the following:
Create a Zero-Based Budget (read our next blog post!)
Pay down high-interest debt first, such as credit cards.
Allocate funds toward building or replenishing your emergency fund.
Set goals for increasing savings or investments.
Identify opportunities to reduce spending and reallocate those funds toward achieving your financial objectives.
What do you want to accomplish by the end of 2025? If you have completed the steps above you should have a complete view of your current financial situation.
Use the insights from your financial audit to create a plan for 2025. Complete all of the following:
Create a Zero-Based Budget (read our next blog post!)
Pay down high-interest debt first, such as credit cards.
Allocate funds toward building or replenishing your emergency fund.
Set goals for increasing savings or investments.
Identify opportunities to reduce spending and reallocate those funds toward achieving your financial objectives.
Conducting a financial audit is an empowering first step toward achieving financial mastery. By organizing your accounts, analyzing your spending habits, and assessing your assets and debts, you create a clear and actionable picture of your financial health. From there, you can monitor your credit, identify areas for improvement, and craft a personalized plan to reach your 2025 financial goals. This process not only helps you take control of your money but also sets the foundation for long-term stability and success.
Start today, and give yourself the gift of financial clarity and confidence for the year ahead- and stay tuned for the next article about creating a Zero-Based Budget!