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Personal Finances Checkup [8 Steps] Thumbnail

Personal Finances Checkup [8 Steps]

By Sarah Carlson, CFP®, CLU®, ChFC®

Personal finances are important to check up on every month. During the summer, it seems as if time slows down. You should take advantage of this by checking in on your family's finances. Doing a thorough analysis of your family's wealth may seem daunting, but these eight easy steps will help you stay on track.

1. Analyzing Your Budget

The Bureau of Economic Analysis reported that the personal savings rate is at only 6.4%. An effective way to avoid spending too much money is to set up a budget. Be aware of how much you spend each month and year. If you do not have a budget, then you should create one now.

Credit cards are a great tool to use when shopping online. However, many people carry too much debt on their credit cards. Paying off credit card debt is a priority. Many people struggle to manage their finances because they do not know how to budget properly. Evaluate your savings and spending record over the past six to 12 months.

2. Look for Tax Savings

Do you have trouble with your paperwork every March and April? Try taking a different approach to tax time by evaluating your tax savings strategies first. You can work with a financial advisor or tax professional to create a mock tax return, as this will help you understand your tax withholding and tax savings options, such as 401k or 403b options, IRA and HSA contributions. 

Center around recording any time-sensitive deductions and keep up to date on any tax law changes. Connecting with your tax professional now could mean you have additional opportunity to get ready and plan together for next year's returns.

3. Take Care of Debt

62% of adults have carried over credit card debt in the last 12 months. Assuming that you've been putting off dealing with your amounting expenses, now's the time to start planning to pay it off. While most purchasers have some measure of good debt (mortgages, car payments, etc.), it's the bad debt (credit card debt, student loans, etc.) that you'll likely want to focus on managing and eliminating.

While you could be enticed to just pay off what appears on the bills every month,you may want to create a debt summary to get a better idea of your total debt's big picture. When you and your financial advisor create an annual debt summary, you can better understand whether you're gradually working down the amount or falling farther into a financial hole.

4. Revisit Your Goals

Many events can happen in a year:

  • Marriage
  • Death
  • Divorce
  • Growing your family
  • Career change

Even little changes, like a job promotion or sending a kid off to college, can have a significant impact on your financial status. That's why it's vital to routinely review your long-term goals and progress towards them while revisiting and evaluating your shorter-term goals as well. 

5. Evaluate Coverage and Providers

As you're reviewing your budget and expenses in your personal finances checkup, take the extra time to thoroughly evaluate your current providers and coverage options. This includes your internet, cable and wireless service providers in addition to your insurance coverage options. If you tend to set up auto payments and forget about your monthly bills, this could be an opportune time to revisit what it is you're actually paying for.  

6. Reassess and Rebalance Your Portfolio

It's essential to visit your portfolio and risk tolerance regularly to help keep it in line with your tolerance, goals and market conditions. While most managed portfolios will be rebalanced automatically, it's important to take stock of your investments' big picture. Doing so can help you determine if you need to diversify differently or reassess your risk tolerance.

7. Review Your Retirement Savings

Whether retirement is a long time down the road or within the upcoming year, reviewing your retirement savings on an annual basis is a great habit to start. Take the time to survey whether you're maximizing your retirement contribution options and how the savings you're making today will translate into retirement income later down the line.

8. Assess Your Estate Plan

It's not fun to plan for the worst-case scenario, but leaving your family with an outdated will, trust or estate plan can lead to some major issues down the line. As you review your legacy plan annually, make sure you're accounting for any newly acquired assets (houses, vehicles, pets, etc.) while checking that your designated beneficiaries are still willing and able to assist in the event of your passing.

Check up on your personal finances every month


While you're probably wandering off in fantasy land of book reading, beach-going and backyard barbecuing this summer, don't forget to do yourself a favor and squeeze in some financial assessing as well. Performing your own personal finances checkup annually gives you time to prepare for tax season, budget, and acquire peace of mind knowing your family's finances are aligned with your future goals and current needs.

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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.