Financial Wellness Check-up: Ten Steps to Financial Health

Just as you visit your primary care physician for an annual checkup or have your car inspected annually, it's as important to review your financial picture to gauge the wellness of your overall financial health.  The following are ten things to consider:

  1. What are your goals?  Do you have a written plan?  It is helpful to identify short and long-term goals and the steps that you commit to take to meet those goals. 
  2. Liquid savings:  Your "rainy day" fund should be able to meet between three to six months of expenses if you suddenly found yourself unemployed or are facing a large, unplanned expenditure.
  3. Upcoming changes:  If you are able to plan ahead of changes, you may feel more in control of future events.  If life events are looming on the horizon, proactive planning and adjustments to budgets, savings, etc. should be considered.
  4. Adequate protection:  do you maintain the appropriate amount of insurance (life, home/renters, health, disability, etc.)?  Are your will and other estate planning documents up-to-date?
  5. Investment performance:  compare your rate of return against established benchmarks to determine if changes are needed.  Does your savings portfolio match your needs (retirement, college funding, vacations, etc.)?
  6. Budget:  Do you maintain a budget?  If you don't, why not?  Evaluate your cash inflow, adjust outflows to allow yourself to have extra funds, which could be used for savings or to pay down debt.
  7. Review your credit report:  ensure there aren't any mistakes lurking on your report that could harm you when the time comes to apply for credit.
  8. Summarize all debt:  Instead of just thinking of debt in terms of making the minimum monthly payment, accumulate all outstanding loans to really get a picture of what you owe.  While you're at it, you should list the interest rates associated with these varying debts, so that you can concentrate your efforts on paying down those loans with the highest interest rates.  Another option could be investigating refinancing options for your debt in order to obtain lower interest rates.
  9. Think about retirement:  While you may not be anywhere close to retirement age, it never hurts to have a strategy in place.  This should include investing the maximum (or as near to it as possible) allowable amount per year.  Investing the maximum is critical, especially if your employer matches your contributions.  Don't allow yourself to "leave money on the table" by not contributing enough to take full advantage of employer matching funds.
  10. Tax planning:  does your W-4 need to be updated to ensure that you have appropriate tax amounts withheld from your paycheck?  Do you need to make quarterly estimated income tax payments to ensure that you meet annual "safe harbor" tax amounts?  Don't forget about income taxes the minute your annual returns are filed.

This isn't an easy or quick list to accomplish and you may think of other things you'd rather do (hello, root canal!); however, it's important to take the temperature of your financial health on a routine basis, to get a handle on your current situation, so that you may continue to improve it. For more information on how you can improve your financial wellness, contact us

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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