As we start 2022 there are surely people out there wondering how well they did with their finances during the 2021 year. Some people aren’t sure how to go about assessing how well they have done with money and that’s alright. You could compare absolute figures with previous years or other people but this presents problems of its own in measurement. Let’s go through 5 important parts of your finances and see how well you did during 2021.


Let’s start with the most difficult if a not controversial one. Did you hit your savings goals? If you did well you. If you didn’t you might need to do some introspection. One of the biggest mistakes in personal finance is thinking that saving is done out of abundance rather than discipline. Simply put, abundance in the absence of discipline or habit rarely leads to saving. By most accounts you will be told to save around 10% of your income and if you did that it is commendable. This is even better if you managed to do it gradually over the year not all in one go unless you have an irregular income.


If you’re not familiar with the discussion on what to do with your savings you can read about it all here. Investing is pivotal in your financial growth because it gives you financial muscle and with that comes options. Depending on how your life is set up you should be directing some of your savings towards investment and preferably medium to long term ones though there is nothing wrong with mixing short term in there too. How much you put towards investment depends on your debt and emergency fund status; if you have no debt and an adequate emergency fund you can invest more than if you are still building an emergency fund and/or negotiating debt. In investing momentum matters most.


Did you create a budget? Did you follow your budget? Did you review the budget? One thing I remarked on is how my budget changed through the year and things that were regular features at the beginning of the year did not feature at all in the fourth quarter of the year. This is life and that’s why reviewing a budget is very important. I am also hopeful that you got into expense tracking. Budgeting is somewhat like an exercise in that what you are trying to build is the habit that will ultimately lead to the result. So you may stumble, expect to stumble. Overall maintain the direction and get better at budgeting.


If you are fortunate enough to have not needed debt for personal expenditure this doesn’t apply to you. For the rest of us, debt is something we have to contend with. If you have productive debt then that shouldn’t count as that is its relationship with the asset it finances. Did you manage to reduce or stop depending on debt during the year? Perhaps you have long term debt, did you manage to reduce it? In 2020 and 2021 consumer debt placed a heavy burden with incomes being completely cut or reduced for many people. Keeping your debt repayments manageable was a key lesson for many.


And how were your spending habits in 2021? This is a bit of a trick question because you’d only definitively have an answer if you seriously tracked your expenditure. I deal with many people who want to drastically change their spending patterns and I always recommend documenting those spending patterns first. So how well did you track your spending is the first question. If you tracked it well you have very good records to look at and compare month by month. And it’s not just about spending less. Did you spend better during the year? Did you make choices that are consistent with your goals?

As a parting shot, I’d like to ask if you read a book or taking a course or some other effort to improve your financial literacy. These efforts count double and if you did well done. I believe if you did one thing (book or course) each quarter you’re in good stead though once a month is ideal if you want drastic change. With these things in mind let’s look forward to 2022 and doing better in the new year.