Skip Navigation

Year End Review: Guide to Financial Freedom


Many of the columns in this space have reviewed various components of a sound personal financial plan. Every December I recommend that individuals take a close look at their personal financial plans and assess the progress or lack of progress made toward their stated goals. Not only is it logical to do such a review as we approach the end of the year, it is also timely as the holiday season accounts for the greatest portion of personal discretionary spending each year. Taking stock of our financial well being at this time may support modifying our holiday spending one way or another, which in turn directly impacts our financial plan. Furthermore, as the tax season is right around the corner, it is helpful to review any elements of the plan which require action before year end from a tax planning perspective.

I look at a personal financial plan from four perspectives: budgeting, spending (cash flow management), investing, and periodic review. I try to anticipate the cash flow requirements associated with each of the first three segments, and then make modifications as I review the annual results.

The itemization within each category below can be used to serve as a template, and should be modified to meet your specific needs. It is best to actually lay out the various elements of the template on a spreadsheet, either hand written or computer generated, and actually have a document to refer to for family discussion and ongoing planning.


  • Recurring expenses: mortgage payment, (include provision for real estate taxes and homeowner’s insurance); food/entertainment; clothing/personal care items; charitable contributions; monthly utilities; auto/transportation expenses; credit card debt service
  • Periodic expenses: medical/dental visits; major home maintenance (painting, HVAC servicing, etc.); education expenses;
  • One time expenses: major home maintenance (roof, tuck pointing, HVAC replacement); vacation;
  • Additions to retirement savings
  • Additions to “emergency fund”
  • Spending

  • Estimate expected monthly receipts (payroll, savings interest, scholarship funds, any other source of revenue)
  • Calculate total recurring monthly expenses
  • Calculate estimated periodic expenses
  • Calculate estimated one time expenses
  • Total expected out-flows against expected in-flows: a positive balance should be allocated to investment
  • Investment

  • College savings
  • Personal savings
  • Investment vehicles: mutual funds, individual stock purchases, government or corporate bonds, Credit Union CD’s
  • Life insurance
  • Review of Performance

    The most important aspect of the road to financial freedom is reviewing the results we achieve through planning and budgeting, and then making adjustments to the plan as warranted. There will always be unexpected expenses. Things we cannot anticipate will arise and cause us to go to the emergency fund; if there is no emergency fund we may need to borrow short term to meet the needs. Occasionally there are pleasant unanticipated events: an inheritance, a year end bonus, or a planned and budgeted expense that comes in under budget. It is important to modify the plan in response to both favorable and unfavorable events.

    Personal financial planning and budgeting is not only about the future. While it is important to provide for our financial future, we must not lose sight of the fact that we live in the present. Life is much more enjoyable when we have planned our finances in such a way as to remove the stress associated with the uncertainty caused by unexpected financial burdens. I made reference to “short term borrowing” above, which at times may be a necessity. Taking a loan for 12, 18, 24 months to put our financial plan back on track is often a necessity. As long as we maintain the discipline to shop for the best terms (the credit union would be my first stop), borrow only what we need, and set a repayment schedule that fits into our monthly income stream, we will soon be back on track toward achieving the longer term goals. Current interest rate levels are the lowest they have been since the 1950’s, which affords some comfort in the event that we need to borrow.

    In conclusion, the basic concepts of planning, common sense, and a desire to achieve both short term and long term goals all go a long way toward achieving financial freedom.

    ©Patrick J. Catania 2010
    The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Baxter Credit Union, its Board of Directors, or its employees. The author is responsible for the content. Readers should consult with, and seek professional advice from their own attorneys, accountants, and financial advisors with respect to their individual financial needs and circumstances.

    We welcome your feedback and ideas regarding this service. To submit a comment or idea for a future article, please email us at