Reflecting on Your Financial Year

As another year draws to a close, taking time to reflect on your financial life isn't just about tallying successes and failures. It's about understanding the story your financial decisions tell about your values, priorities, and growth.

Think of it as a personal highlight reel. Whether you hit major milestones or stumbled along the way, reviewing your progress can provide insights, help you celebrate wins, and shape your path forward.

The Power of Financial Storytelling

Every financial decision you've made this year adds a chapter to your money story. That impulse purchase that seemed essential in the moment or the savings milestone you finally reached - each represents a moment of choice that shaped your financial narrative.

This year, you may have made some significant financial choices - buying a car, investing in a new skill, or maybe just deciding between saving and splurging. Now’s the time to ask:

• Did the decision align with my goals?
• Was the purchase worth it?
• If faced with the same choice, would I make it again?

For example, let’s say you upgraded to a new smartphone. Did it improve productivity or bring genuine joy? Or did it leave you wishing you’d held onto your old one for a bit longer? If you invested in stocks, assess how those investments performed. Were the risks worth the rewards?

Action Item: Create a "decision log" of your biggest financial choices. Write down why you made each decision, its outcome, and what you’d do differently next time. This exercise helps you identify patterns and refine your decision-making in the coming year.

Celebrating Your Wins

Reflection isn’t just about finding areas to improve—it’s also about recognizing what you did right. Celebrating even small financial successes can boost your motivation and remind you of the progress you’ve made. Wins worth celebrating include:

• Paying off a credit card or loan.
• Sticking to a budget for several months.
• Building or maintaining an emergency fund.
• Starting a new savings or investment account.

These achievements, no matter the size, are worth celebrating. If you cut back on impulse buys or consistently contributed to your savings, that's great! Each small win builds confidence and momentum for tackling larger financial goals ahead.

Action Item: Create a reminder of your financial wins. This could be a savings tracker, a debt-free milestone calendar, or even a jar where you add a coin for every positive financial habit. Seeing your progress can inspire you continue your good work.

Learning From Setbacks

Of course, not every financial decision goes as planned. Unexpected expenses, impulse purchases, or budget missteps happen to everyone. What matters is how you respond. Common setbacks include:

• Unexpected Expenses: Did a car repair or medical bill catch you off guard? Think about building an emergency fund or increasing your savings cushion.
• Impulse Spending: If overspending was a challenge, consider setting stricter limits or using tools like budgeting apps.
• Income Loss: Did you experience a drop in income? Look at how you adjusted and what safety nets, like side gigs or savings, helped you stay afloat.

Think of your financial setbacks not as failures, but as plot twists in your larger story - opportunities for character development, if you will. Mistakes are part of the game. The key is to treat them as learning opportunities that offer an opportunity for growth.

Action Item: Write down one actionable lesson from each setback. For example, “An unexpected home repair derailed my budget. Next year, I’ll prioritize building a $2,000 emergency fund.”

Reviewing Habits and Trends

Reflection goes beyond individual decisions. It’s about spotting patterns in your financial habits and behaviors. Were there times of the year when you spent more impulsively? Did you stick to a budget, or did certain expenses throw you off track?

How do you spot trends? Look at your spending and saving:

• Review your annual or monthly spending summaries.
• Identify recurring expenses that didn’t add value, like unused subscriptions.
• Look for months when savings dipped or debt increased and consider why.

Understanding these trends helps you proactively address potential pitfalls in the year ahead.

Action Item: Download your checking and credit card statements for the year. Categorize expenses to identify spending patterns. Highlight areas for improvement, like reducing subscriptions or reallocating money toward savings. See Conducting a Year-End Financial Inventory earlier this week for details.

Creating a Vision for the Coming Year

Now that you've reviewed your decisions, successes, and setbacks, it's time to use those reflections to set intentions for the upcoming year. What financial habits do you want to build? What specific goals do you hope to achieve?

Whatever your aspirations, this reflection period serves as a powerful foundation for writing your next financial chapter. Questions to ask yourself include:

• What financial habits do I want to build or strengthen?
• What specific goals do I want to achieve?
• What lessons from this year will I carry forward?

In our next article, we'll explore how to transform these insights into concrete goals and actionable plans for the year ahead.

The Takeaway

Reflection is powerful, but action is what drives change. It's OK to start small: celebrate one financial win from this year, identify one setback and write down a lesson from it, and choose one small habit to work on immediately (like automating your savings).

The simple act of taking one step today can create momentum that carries you into the new year with confidence.