Have you Completed Your Personal Financial Checkup?
In every area of your life, it’s important to submit yourself to a checkup to find out how you’re doing. [column size=”two-third”]Anytime is an ideal time to sit back and review your finances. Depending on the time of the year, you may be able to make changes to help you prepare for filing your annual tax return. Or you may simply take advantage of new opportunities arising from changes in your personal situation.
A financial checkup can help you make course corrections and ensure that you’re remaining on the path to the success you were born to experience. This is especially true about your finances.[/column]
[column size=”one-third” last=”true”]Your fiscal health affects your overall sense of well-being, self-confidence, and happiness more than anything else. Once or twice a year, it’s important to evaluate where you are financially, where you’re going, and how best to get there.[/column]
Follow these tips to perform a personal financial checkup that ensures you experience the peace and prosperity you deserve:
- Identify where you are. If you don’t have a family or personal budget, now’s the time to create one. Simply list your income and monthly expenses. Any time you spend money, write it down. Simply being aware of your spending habits and the amount of money you have available will cause you to make more sound financial decisions.
- If you already have a family budget, now’s the time to make sure that all of your expenses are listed in the budget and funded accurately. An updated budget is your roadmap for your journey into the next few months.
- Have you analyzed your monthly spending to identify ways to save?
- The more clearly you see your current financial status, the more motivated you’ll be to make the changes you need to reach your goals.
- Identify where you want to go. If you’ve already established financial goals, evaluate whether those goals still make sense in light of your current situation. Think about what’s most important to you, and match your financial budget and goals to those values. Include a fun purchase or vacation to keep you motivated. Do you have written financial goals in the following areas?
- Giving goals?
- Saving goals?
- Reduction of debt goals?
- Do you have a goal to become 100% debt free, including your mortgage?
- Review your insurance coverage. As the circumstances of your life change, your needs for protection may change as well. Look over your homeowners insurance, health insurance, and life insurance and make sure your coverage meets your current needs. Also consider disability insurance, especially if you provide income that your household counts on.
- Create or bolster your emergency fund. The backbone of any financial plan that truly provides comfort is a fund that can pay for unexpected expenses. If the car or air conditioner breaks down, your emergency fund makes sure that all the financial claims you made above stay intact.
- While other families struggle to make ends meet, falling behind at the first unexpected expense, you can enjoy the peace of mind that comes from knowing that you’re covered no matter what goes wrong. This can only come from a well-funded emergency fund.
- Establish or update your will. While the end of life is an uncomfortable subject for many, it’s important to have your affairs in order for those you may leave behind if something should ever happen to you.
- Evaluate your investments. How’s your investment portfolio performing? Are you investing in the right vehicles to match your retirement, college savings and other goals? You may want to seek the advice of a financial advisor if you’re unfamiliar with this area of your financial picture.
- Review tax options.
- Adjust your tax withholding, if necessary. Many people provide the federal government with an interest-free loan every year. At the end of the year, you should be close to breaking even. Instead of receiving a large refund, adjust your deductions and use a savings or money market account to make interest off the difference.
- Are you possibly subject to the Alternative Minimum Tax (AMT)? Stock option exercise, large deductions or the phase out of the benefits of personal exemptions at high-income levels could subject you to this tax. Contact your tax professional if you think you may be subject to AMT.
- Think about upcoming life changes. Do you anticipate anything big happening in the near future? Is your car getting old? Are there any medical expenses for a surgery or pregnancy that’s coming up? To complete your checkup, think through upcoming expenses that are outside your normal budget and plan ahead.
Once you’ve set yourself up for financial success by reviewing these areas of your family’s plan, repeat this personal financial checkup once or twice a year.
The keys to financial success are awareness, determination to succeed, and the ability to dream big dreams. Your personal financial checkup is the roadmap that’ll keep you on track.