When Was the Last Time You Had a Financial Checkup?

by Miranda Marquit · 3 comments

Financial checkup

One of the best things you can do for your finances is to periodically check your financial health. As the fourth quarter of 2012 gets solidly underway, it’s a good idea to evaluate your finances, recognize where you are in terms of financial health, and figure out where you want to go from here.

Areas of Consideration for a Financial Checkup

As you prepare for your financial checkup, you should consider the following financial areas, and make adjustments as necessary:

  • Net worth: It’s not a bad idea to start with your net worth. Your net worth offers a snapshot of where your finances are right at this moment. As a result, it can make a good starting point. Look at your current net worth, and compare it to your net worth from your last checkup. This can give you a general idea of the direction you’re headed financially, and it can also warn you if you need to make some changes.
  • Financial plan: Next, review your financial plan, and your overall financial goals. Are you on track? Is your financial plan still helping you reach your goals? Or have things changed enough that you need to make tweaks to your financial plan? If you’ve moved off course from your financial plan, now is a good time to get back on track. Recognize what you need to do to bring your spending and saving back in line with your long-term financial goals.
  • Insurance coverage: Review your insurance policies. Look at the various coverages and plans that you have. It’s a good idea to consider what you need to protect your assets and ensure you have adequate coverage. In some cases, it might make sense to drop some of your coverage, or take steps, like raising the deductible, to lower your premiums.
  • Investments: Consider your investment accounts. Does your asset allocation still make sense? Has your allocation drifted away from what you want? Review the fees you’re paying, as well. If you have investments that are racking up the fees for you, consider switching things up. In some cases, it might also make sense to consolidate your investment accounts.
  • Spending and saving habits: Don’t forget to consider your spending and saving habits. Have you moved away from your savings goals? What about your spending? Have you stopped following your spending priorities? Re-establish your financial priorities, and make sure your spending is in line with them.

Now is also a good time to review your tax liability and look for ways to reduce your taxes before the end of the year. Part of your financial checkup should also include a look at the deductions and credits you might be able to squeeze in before the year ends — whether it’s buying business equipment or donating to charity.

An occasional look at your financial situation is a good idea. You can catch problems, or even just see where you might have become lazy with your finances. A financial checkup can help you identify areas for improvement, so that you can make a plan to boost your situation.

When’s the last time you gave yourself a financial checkup? 

Editor's Note: I've begun tracking my assets through Personal Capital. I'm only using the free service so far and I no longer have to log into all the different accounts just to pull the numbers. And with a single screen showing all my assets, it's much easier to figure out when I need to rebalance or where I stand on the path to financial independence. They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it's free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.

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{ 3 comments… read them below or add one }

Pauline October 16, 2012 at 6:05 am

Great post Miranda, having a financial checkup at least once a year is very important. I do a small one every month and a more consistent one every quarter, or when my financial situation changes (new job…). While reviewing my spending I look for cheaper providers for utilities, phone… I make sure I get the best deal at least once a year and write down the contract end date to renegotiate.

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Sriraksha Financial Planning Services October 19, 2012 at 12:24 am

Nice post. Regular reviewing and monitoring of the portfolio is critical to make sure that our investments are on track and performing as expected.A couple of bad or wrong investments is all that it takes to wipe off a big chunk of our profits made from the good performing ones.

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Shane October 22, 2012 at 11:59 am

Great tips it is always good to know where you are heading and what you can fo to make it better or adjust where you need to.

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