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Financial Checkup: 7 Key Areas to Consider

Financial Checkup: 7 Key Areas to Consider

February 08, 2019

You typically see your doctor once a year to check on your body’s health and well-being. So why don’t you do the same thing with your financial health? An annual financial checkup can help determine if you’re on the right track to reach your goals. Consider these seven key areas.

1. Your budget. 

You may be making monthly budgets and tracking your spending, but now is the time to look at the big picture. Are you covering all of your expenses, or are you coming up short every month? Are you saving enough money? Make adjustments to help pursue your goals over the next year.

2. Your savings goals. 

Do you have children who are looking ahead to college? Are you planning on taking a tropical vacation this year? Maybe you have a home remodeling project coming up. Write down your short-, medium- and long-term savings goals, and figure out how to work them into your budget.

3. Your emergency fund. 

Do you have three to six months’ worth of expenses? Double-check how much money you need in your emergency fund, and add to it if needed. If you have too much money in your emergency fund, consider using it to pay off debt or help with one of your other goals for the year.

4. Your debt.

Take stock of your mortgage, credit card balances and other loans. How quickly can you pay it all off? Would it help to refinance with a lower interest rate? Now is also the time to consider your net worth. Subtracting your debts from your assets is a very good indicator of your financial health.

5. Your investments and retirement plan. 

Look at your 401(k) statements, IRAs and other investments. How did they perform over the past year? You may need to make some adjustments if you aren’t earning what you expected. Advisors suggest saving at least 15% of your pre-tax income for retirement. Are you able to hit 15%? Are there adjustments to be made in other areas of your budget in order to hit 15%?

6. Your insurance coverage. 

It’s possible you’re no longer getting the best deal from your provider. You may be paying for too much coverage. Get new quotes for life, home and auto insurance. You may be able to save hundreds of dollars a year just by switching one plan. That’s money you could be saving each month!

7. Your will. 

Circumstances change. Does your will account for everything it should? Does it adequately provide for your beneficiaries? Have you designated the right people to take care of your children, be power of attorney or executor? Do you have a health directive?

Taking a few moments to carefully consider each of these seven areas can help you ace your yearly financial checkup. Compass Financial advisors are here to help you address your goals. Give us a call to set up your yearly checkup today!