How to do a personal financial check

Financial blues. Image from

What does January mean to you? Is it a moment to regret all the overspending you did in the name of merry-making? Do you get devastated when the landlord comes knocking at your door and you are unable to pay your rent in time? Do your children spend a couple of more days at home because you were ill prepared to take them back to school? If you are not part of the prepared type, the people who have their house in order, those who don’t have qualms taking care of their bills and January is just any other month, then the content in here is for you. If this situation recurs all the time after the festivities, maybe it is time you paused and considered the advice offered by Old Mutual on personal financial planning. Also check out Planning for the future – How to create a Financial Plan.

Financial blues. Image from
Financial blues. Image from


Below are questions to help you analyze your financial plans. With a yes or no answer and a brief soul searching, you are able to know why you lie in terms of prudent use of your income. At the end of it all, you are supposed to be better off after getting that salary or concluding business at your firm.

Do you have a financial goal?

As cliché as it may sound, without a goal, anywhere you end up is your destination. This question helps you understand if you have plan with the money you get.

Do your expenses exceed your income?

The question seeks to know whether you make proper use of your money. If you end up borrowing to more money to cater for your needs after spending your income or your salary gets depleted before end month and you have to live from hand to mouth, then you are treading on a dangerous financial path.

Do expenses increase when you get a pay rise?

With a better pay, comes the yearning to spend more, to travel more and to live more lavishly. However, it does not always have to be that way. You don’t need to elevate your status without a financial consideration. This question will help you understand how you behave whenever you get a pay rise.

Is your current loan financing consumer goods?

This question helps you understand whether you the money you borrowed will yield returns to make it possible for you to service that loan. If it all ends up getting consumed and you have to sweat trying to repay it, then you need to reconsider the uses.

Is your current loan financing development projects?

Whatever project you invest the borrowed money in, it should be viable. That project should give returns and not be supported by another loan. The returns should offset the debt. That way, you will be making proper use of the money.

Do you mind the bank or your business?

If you are focused on only repaying the loan you consumed, then you have your priorities mixed up.


A balance sheet is an analysis of the financial position of an organization or an individual. It compares assets and liabilities. A personal balance sheet is used to tell whether an individual is better off or worse off. A personal balance sheet is prepared by differentiating income and expenses. Income is drawn on one side and expenses on the other side. Income comprises of the salary one gets, extra income from extra work and assets owned. On the other hand, there are basic expenses, secondary expenses and liabilities. Salary should take care of the basic expenses such as tithe/offering, tax, food, rent, dependent education, transport, clothing and utilities such as electricity, water, paraffin, gas. Secondary expenses are not mandatory thus one should not strain their salary but with extra work, or extra income, you are able to take care of expenses such as entertainment, personal improvement, relationships and can even give back to the society. Asset income should be able to cover your liabilities such as loans and Sacco repayment. To gauge whether you are better off, there should be an excess amount to cater for your emergencies and to save.

For you to realize financial independence in the month of January and the rest of the year, you should make conscious effort to budget for your needs with the income you have, be able to take care of the emergency situations you may find yourself in and create a smooth savings plan.

After answering the above questions you need to create a financial plan.  Check out Planning for the future – How to create a Financial Plan.

Questions courtesy of Old Mutual.

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