Usually when you hear the word audit, we assume its a bad thing. But doing a financial audit can help you simplify your personal finances and may even help you save some money. I am a big proponent of simplifying your finance by automating them. But as I wrote in Don’t Automate your Personal Finances and Forget About Them I believe you must review your accounts on a regular basis. That’s why I propose you do a financial audit on your personal finances every so often. At a minimum every six month you should do an audit. The reason for the audit is to make sure all of the auto payments you set up are stilling being processes as you originally established and any automatic payments you discontinued or thought you discontinued have been stopped. Additionally you want to review those payments.
For example you know that gym membership you signed up for at the beginning of the year so you could lost a few pounds and get in shape. It was set up to debit your account on a monthly basis but guess what you have not step foot in the gym in over two months. Doing the audit you could catch this and cancel the membership to save some money each month. Also you know the monthly newspaper subscription you signed up for several months ago thinking you would have time to read the paper. When was the last time you read the paper? So instead of having the monthly charge to your account you can stop it and save money. So you can see performing a financial audit is a good thing. It will help you eliminate expenses you are no longer using as well as verify that your payments are being processed as established.
Here are the things you are looking for when completing a financial audit of your finances:
Monthly Recurring Bills or Expenses – This can be any monthly expense you have charged to your credit card or deducted from your bank account. Review each monthly charge or debit and ask yourself am I still using this services or product. Can it be eliminated?
Monthly Service Fees – Check your account statements to see if you are charged monthly service fees or late charge. For example, are you charged monthly for banking fees. If so look to see what can be done to eliminate the charge. Are you being charged monthly late fees? If you automate this there should not be any late fees. But you want to make sure the payments is deducted on the right date to avoid them. Due dates can change so make sure the payment is deducted on time and allow enough time for processing. If its not it defeats the purpose of automating your finances.
TAKE ACTION by reviewing reviewing all of your auto debits and automated charges to ensure they are set up properly as well as look to eliminate any auto debits for services you no longer are in need of. If you are charged late fees or service review the reason for these fees and look for ways to eliminate them if possible. This will help you save money.
Til next time take one step at a time to simplify your personal finances.
This post was featured in Carnival of Personal Finance Elvis is Dead Edition.