How To Conduct a Financial Checkup

By Jim Probasco Updated March 21, 2022

Reviewed By Andy Smith  Fact Checked By Yarilet Perez

Here's a simple system for assessing your fiscal fitness

Many experts suggest that people make a point of conducting a personal financial checkup on an annual basis or after a major life event (such as a marriage, divorce, birth, or death). The question is, what does that mean exactly?  To make sure you don’t miss something critical to your financial well-being, here are the main topics you should plan to cover.

A financial checkup is a systematic look at the complete state of your finances.

It can be useful to perform a financial checkup annually and after any major life event, such as a marriage, divorce, birth, or death.

Your checkup should include your retirement accounts and other savings, your debts, your estate plan, and your insurance coverage, among other topics.

Review Your Life Changes

To begin with, review any major changes in your life that have taken place since your last financial checkup. Have you changed jobs, gotten married or divorced, welcomed a new family member, received an inheritance, bought a home, moved, or retired?

Each of these life events can alter your overall financial picture. As you go through the sections below, consider how any recent life changes could affect your plans moving forward.

Set or Reset Financial Goals

Building an adequate retirement fund is one example of a financial goal. Others include creating an emergency fund, saving up for a down payment on a car or home, starting your own business, or anything else that requires money you don't already have.

Evaluate your progress toward your financial goals and adjust as needed. Once you achieve a goal, cross it off the list and replace it with another.

Sketch Out a Budget

Your budget is a blueprint for handling your income and expenses on a recurring basis. A budget should be monitored and adjusted as needed.

The idea is to make sure you have enough income to cover all your usual expenses, with some extra set aside for your longer-term financial goals. You can maintain your budget with pencil and paper, a computer spreadsheet, or one of the many available free or inexpensive budgeting software programs.

Assess Your Debt

Review your progress in paying down all debt, including loans and credit cards. If your debt is rising, especially high-interest credit card debt, it might be time to adjust your spending so that those balances start to decline again.

To continue reading, please go to the original article here:

https://www.investopedia.com/personal-finance/how-conduct-financial-checkup/