How to do a financial checkup in 13 key areas of your life

by Bob Snyder on January 8, 2013

The start of a new year is always a time that we are more inclined to reflect on what has happened in the last year and what is coming in the new year. financial checkupIt is a good time to consider putting together a yearly financial checkup for those things that sometimes slip by and become forgotten. Since they aren’t activities that we do regularly there is a tendency to say we will take care of that tomorrow, or next week, or next month and it never really happens. Many of these items can cause us real problems though if ignored forever.

Proverbs 27:23-24 says

Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations.

You may not have herds and flocks, but taking the time for an annual financial checkup can save you from real disaster.

Do an insurance review

Review your homeowners or renters policy

Any changes that would affect your coverage? Did you do any significant remodeling that would affect the value of your home? Is the replacement cost coverage still accurate? Have you purchased any highly valuable personal items in the past year that should be covered on your policy?

Review your auto policies

Have you bought or sold vehicles? New drivers in the household? Have you made any changes that affect the number of miles you drive each month?

Review your life insurance

Any changes in marital status or with kids that affect how much life insurance you need? Changes in jobs or income that would affect the amount of life insurance you should have?

Schedule an appointment with your insurance agent to review each of these areas and make sure your coverage is appropriate.

Review your investments

Remember investing is always for the long-term. You should not be making investment changes based on the daily ups and downs of the market. It is a good idea at least once a year though to do a quick review of your investments. Depending on how your funds have performed you might need to do some readjustments to restore the proper mix of investments. Perhaps you have a fund that has been consistently under performing and you might need to trade it for a different fund. Did you have a child in the past year? Do you need to start a college fund? Schedule some time with your investment adviser to review the status of your accounts.

Check your beneficiaries

Particularly if you have experienced any significant life events, it is so important to review beneficiaries you have listed on insurance or investment accounts. Have you experienced a divorce or marriage? Had children? Lost a close loved one? All of these could impact who you have listed as a beneficiary.

Check your credit reports

You are entitled to request a copy of your credit report from each of the three major credit bureaus once a year. With the rise of identity theft, it is very important to review your reports once a year to make sure there is nothing there that you can’t explain.

Review your will

Take a few minutes to review your will. Have you experienced any major life changes that would affect how you would want your estate handled? Change in marital status? Did you have a child? Have your finances changed in any significant way that should be reflected in your will?

Schedule a yearly medical checkup

Get a yearly physical. Catching a medical condition early might not only save your life but it could save you thousands of dollars as well.

Review household expenses

Spend a few minutes reviewing your monthly expenses. Are there services you are paying for that you rarely use? Do you subscribe to magazines that you never read? Can you change provides for services like cable TV, phone, or internet and get a better new customer rate?

Check your giving

Have you been blessed in the past year? Are there areas where you could increase your giving? Are you tithing to your local church? If not think about starting. Do you have other charities you support? Take a few moments to review all of your giving and plan for how you will give in 2013.

Review your legacy drawer

It is a great idea to have a “legacy drawer” where you document financial information that your family would need in the event you passed away. That information is only valuable though if it accurate. Take a few minutes to review what is there. Have you added or removed accounts? Made changes to your insurance? Changed investments? Make sure you review the information here at least once a year.

Change passwords

Do you have online access to any of your financial accounts? Consider changing your passwords at least once a year. Identity theft is a real problem in our society today. Regularly changing passwords will help protect you. Use different passwords for financial accounts as opposed to e-mail or social media accounts. Try to use passwords that aren’t common words in the dictionary. Add numbers, mixed case, or other special characters to make them hard to guess.

Set some goals

Lastly, take some time to evaluate how your finances stand today and where you would like them to be. Are there areas you wish were better? Wish you had more money saved? Fewer debts? More money saved for retirement or college? Wish you could give more but you just don’t have it? Wish you had a better job? If there are any of these areas that you would like to improve, set some written goals. You might not reach them, but I will guarantee you will come closer if you have written goals than if you have none at all.

Take the time

The list might seem overwhelming if you tried to do all of these at once. Get a calendar and schedule one of these areas for review each month.When you do these items on your financial checkup doesn’t matter so much as long as you do them at least on an annual basis. Your family will thank you and you might save yourself thousands of dollars if the worst happens.

What areas do you review on an annual basis?

Photo credit: StockMonkeys.com (creative commons)

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