Do you know where your finances are sitting right now? Are you scared to peak at accounts? Are you just trying to survive at the moment? Well, if you haven’t been giving your finances a little TLC lately, it might be time for a financial check up. Here’s how to do it, and not take all day.
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Look Over Your Budget
The first step in your financial check up should be to look over your budget. If you don’t have a budget, now is the time to make one.
Even if your budget has worked for you in the past, things change.
You may have…
- gotten a raise,
- new bills,
- slashed current bills, or even
- added a new member to the family.
It’s important to revisit your budget and make sure that your income and expenses are current and are working for you right now.
Now is also the time to look at your spending.
If you’ve overspent in some areas, or know you can lower some of your regular expenses, you can make plans to cancel certain items or call companies to lower your bills. Take some time to sit down and record what you’ve earned and spent over the past six to 12 months. And, if you’re making quite a bit more than you’re spending, now is the time to look at see how you can capitalize on that.
Review Your Retirement & Savings Accounts
Are you paying into a 401k? Are you contributing to an HSA? Do you know where your Roth IRA stands at the moment? Could you be contributing more? Should you take a break or contribute less? These are all things that you should be asking yourself as you check your retirement and savings accounts.
Also, now is the time to evaluate any returns on your investments and rebalance your portfolio (if needed). Some robo advisors rebalance your portfolio automatically, but it’s always a good thing to check. At the end of the day, it is your money.
While we did go over this a bit in the review your budget task, it’s also the time to take a more detailed look at the bills you pay regularly.
- Do they make sense?
- Have you had a life change that will mean you need to update them?
For example, maybe you just had a new baby or adopted a dog. Now is the time to get them insured, or add them to any plans that they need to be added on (like dental, vision, life insurance, etc). While none of these things are “fun”, they can save you from a major headache and expensive bills down the road.
Don’t Forget Your W-4
When was the last time you checked your W-4? If it’s been a while, now is the time to take a look. You can also use a federal income tax calculator to see where you stand when it comes to taxes and what you may owe (or get back).
If you do see that you may owe money, or get too big of a refund, now is the perfect time to adjust your withholdings with your employer. You want to withhold just enough that you don’t owe too much in taxes, but also so you don’t give the government a bunch of your money for free.
Check Your Credit Report
Do you know your credit score? If you haven’t checked in a while, this is something to add to your financial check up. You can get your credit report for free once a year from all three major bureaus, and it’s important to keep tabs.
For example, you may have a debt that you didn’t know you had, or your score may have raised based on your history and usage of cards/loans. Plus, knowing your own credit score comes in handy when it comes to negotiations if you need a loan.
Check On Your Debts If You Have Them
While it’s important to know your budget, savings, and withholdings, it’s also important to know where you stand with debt. Of course, the ultimate goal is no debt. But, for many, that process can take a few years (or more). So, you should at least keep up to date with where you are on your debt journey.
The first thing that you should do is take a look at all of your debt.
- What have you paid off?
- What are you currently working on?
- Did your credit report show you any debts that went into collections?
Pull all of these account statements and examine them to see where you stand.
After you’ve done that, you can make a better plan to pay them off. There are many ways to do this, but the debt snowball and debt avalanche are typically the most popular. But it’s up to you on how you want to approach your debt pay off and plan for the future.
Make Some New Goals
The last step in your financial check up should be to make some new goals.
- What do you want to accomplish?
- How do you want your money to work for you?
- What financial goals do you want to achieve in the next few months to a year?
Your financial goals can be anything. It can be re-establishing your four walls, saving up an emergency fund, or even funding a vacation in cash. Whatever it is that you want to accomplish, now is the time to plan for it.
Are You Ready For Your Financial Check Up?
See? A financial check up isn’t so bad, and it doesn’t take as much time as you’d think. You can easily accomplish this in less than a day. And, it’s something you should do regularly, at least once or twice a year. It can really make a difference in your finances.
AUTHOR Kimberly Studdard
Kim Studdard is a project manager for online entrepreneurs and small businesses. When she isn't spending time with her daughter and husband, or reading her growing pile of horror books, you'll find her working on her HR degree and working towards FIRE.