Manage Your Money Like Warren Buffett

If you saw a mysterious $4 entry on your income-tax return, would you sweat it? What if you were a billionaire many times over -- would it even catch your eye?

It would if you were Warren Buffett. In an interview several years ago, the great man copped to taking the time to get to the bottom of the puzzling entry (a royalty payment, as it turns out).

If the man at the helm of Berkshire Hathaway has time to track down a measly $4 discrepancy, perhaps those of us in the cheap seats should consider carving out an hour or so every few months to check in on our financial affairs. Who knows, that Buffett guy may actually be on to something.

Your $4, $400, $4,000 or $40,000 Discrepancy

We all get mired in the day-to-day details of keeping our empires (or gazillion-dollar companies) running smoothly, but April is actually the perfect time to host your first-ever You, Inc., audit: If you recently prepared your tax return, it’s likely that a lot of what you need to perform this review (W-2s, retirement account statements, bank statements) is still strewn across your kitchen table. All you need is an agenda (which I've provided below) and some snacks (that's all you).

A personal audit gives you a clear picture of your overall net worth and provides a baseline from which to determine if you're on the right track. More to the point: This exercise will answer once and for all the burning question, "Can I afford a 42-inch plasma TV this year?" (Or maybe that's just my burning question.)

In all seriousness, your quarterly financial review should answer four critical big-picture questions:

1. Are operating costs under control? Have you overlooked new fees and unused services when feeding statement filler to the shredder? Review bills (utilities, insurance, etc.) for funny stuff and red-flag any pending budget-busters (leaky roof? arthritic pet?).

2. Are deficits on the downward spiral? For any lingering "bad debts" (credit cards, car loans), having a payoff plan will keep daily stress in check. (See our get out of debt advice for tips on winning the credit card game.) Note progress and obstacles, such as changes in your credit card terms.

3. Are you adequately funding your cash cushion? Short-term savings (a.k.a. your emergency fund) are best kept separate from your day-to-day cash. Is your cash stash suitably funded? Are you earning decent interest on your dough?

4. Is your investment plan up to snuff? Review your retirement account (IRA, 401(k)) contributions to see if you're on track to max out the accounts. Evaluate your portfolio's holdings and reassess each position using what investing luminary Peter Lynch calls the "two-minute drill" -- i.e., reevaluate the reasons you bought shares in the business and look for any red flags on the fundamentals. A tad jittery about the market lately? Join the club. Find your happy place and review last month's recession investing advice until your pulse rate is within the normal range.

Motley Fool consumer finance expert Dayana Yochim is the sole proprietor of Dayana Yochim, Inc., which serves shareholders buttered popcorn and Twizzlers during its quarterly financial reviews.