January is a time of newness and restart. One year gone, another one has begun. But now that the champagne has gone flat, it’s time to get back to business.
Around mid-January, credit card companies put out your Year-End summary – a synopsis of all your charges over the last twelve months. This document doesn’t get the fanfare it should, but it can be an important tool in managing your financial health. It lays out in simple black and white how much you spent, often by category: groceries, travel, entertainment, transportation, fees. Some may also summarize by month so you can see how your spending varied across the year.
Now, depending on how you’ve been using your credit cards, this may be a nice summation of your good discipline and spending habits. If so, good job, have a cookie. However, for others it might be a needed wake up call to get your coins under control. But it’s OK. We’ll get through this together.
Step 1: Get your summary
Log on to your credit card’s website. The summary is usually under Statement section for the prior year. Print. Rinse and repeat for any additional cards.
Step 2: Review
First, look at the summary by category. Are any categories higher than expected? In particular, examine the unessential categories: dining, entertainment, and the nebulous merchandise. Can you remember most of those purchases? Were they really meaningful?
Step 3: Compare to your budget
Now look at your budget (you have one of those, right?). Do you need to revise your budget based on your spending? For example, if you spent more in the travel category than you initially budgeted for and remember each and every trip, perhaps you need to up your allocation in that category.
Year-End summaries can be great tools to review your spending and make changes in your budget for the upcoming year. How about you? Are there other ways you use the year-end summary to improve your finances? Leave a comment below.