Just like it’s important to have you yearly health check up it’s important to also do checkup to find out how you’re doing financially. This way, you can make course corrections and make sure that you’re staying on the path to the success.
Your economic health affects your overall sense of well-being, self-confidence, and happiness more than anything else. So once or twice a year, it’s important to evaluate where you are financially, where you’re going, and how best to get to your goals.
Here are 8 tips perform a personal financial checkup:
1. Identify where you are. If you don’t have a family or personal budget, there is no better time than now to create one. Jot down your income and monthly expenses (any time you spend money, write it down) on this personal budget worksheet. Just being aware of your spending habits and the amount of money you have available will help you to make more sound financial decisions.
- If you already have a family budget, take the time to make sure that all of your expenses are listed in the budget and funded accurately. This updated budget will be your roadmap for your journey into the next few months.
- 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.
Also see: Keeping Organized with a Bill Calendar.
2. Identify where you want to go. Once you have 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. But make sure to include a fun purchase or vacation to keep you motivated, if you can afford it, if you can’t afford much make it small.
3. Review your insurance coverage. As the circumstances of your life change (new baby or marriage, etc.), your needs for insurance coverage may change as well. Take a 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.
4. Create or build up 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 goals you made above stay intact.
- While other families struggle to make ends meet and fall behind at the first unexpected expense, a realistic emergency fund can help you 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.
5. Establish or update your will. While the end of life is an uncomfortable subject for many people, it’s important to have this in order for those you may leave behind if something should ever happen to you.
6. 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? If you have not even started investing yet you may want to seek the advice of a local financial adviser or .
7. Adjust your tax withholding, if necessary. Since we are coming up on tax day here this is a great topic! Many people provide the federal government with an interest-free loan every year by have too much money withheld from their paycheck. 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. Refunds are nice.. but who wants to give the government an interest free loan!
8. 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. Be realistic, you don’t want to be caught off guard.
Once you’ve set yourself up for financial success by reviewing these areas of your family’s plan, make sure repeat this personal financial checkup once or twice a year. Also, make sure to do this with your spouse or even kids as they get older. It’s a great way to keep everyone in the household informed on finances and sets a great example for kids.
The keys to financial success are awareness, determination to succeed, and the ability to dream big dreams. Your personal financial checkup is the guide that will keep you on track of those dreams.
personal budget worksheet
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