How To Give Yourself a Financial Checkup
April 1, 2022
Taking care of your finances is just as important as taking care of your health. Just like you go to the doctor for regular checkups, your money needs regular checkups too.
A financial checkup helps you understand where you stand, what’s working, and where you can improve. This guide will show you how to give yourself a financial checkup, why it matters, and the steps to take to keep your financial health strong.
The Purpose of a Financial Checkup
A financial checkup is a review of your finances to see how you are doing with your money. The goal is to find out if you are on track to meet your financial goals, like saving for a house, paying off debt, or planning for retirement. It helps you spot problems early, make smart decisions, and adjust your plan if needed.
When you give yourself a financial checkup, you look at things like your income, expenses, savings, investments, and debt. You compare where you are now to where you want to be. It’s all about making sure your money is working as hard as you are.
You might also like: What’s a Financial Checkup and Do I Need One?
The Benefits of a Financial Checkup
There are many benefits to checking your financial health, including the following:
You’ll know exactly where your money is going.
When you know your finances are in good shape, you may feel more secure.
You can catch potential problems early.
You can adjust your plan to meet your financial goals.
In sum, regular checkups help you build a brighter financial future.
You might also like: Money Management: How To Create a Budget That Works For You
6 Steps To Conduct a Financial Checkup on Yourself
Giving yourself a financial checkup isn’t hard, but it does take a little time. Follow these six steps to get a clear picture of your financial health.
1. Gather Your Financial Documents
Start by collecting all your important financial documents. This includes:
Bank statements.
Pay stubs.
Bills and receipts.
Investment and retirement account statements.
Loan and credit card statements.
Get all your documents in one place so it’s easier to see the big picture.
You might also like: 7 Easy Ways To Spring Clean Your Bank Accounts
2. Review Your Budget
If you have a budget, look at it closely. If not, now is a good time to make one. A budget helps you track your income and expenses. You want to make sure you are not spending more than you earn.
Look at your spending habits. Are there areas where you can cut back? Could you save more? You can use a loan balance calculator to see how your budget might change if you pay off a debt or take on a new expense.
Recommended: Free Budgeting Online Course at Centier To You
3. Check Your Savings
Savings are a big part of your financial wellness. Do you have an emergency fund set aside? An emergency fund can help you cover unexpected expenses without going into debt. A good rule of thumb is to save three to six months’ worth of living expenses.
Review your savings account to see if you are making progress toward your goals. If you don’t have an emergency fund or want to save more, consider opening a high-interest savings account with Centier to help your savings grow faster.
Recommended: Monthly Savings Calculator
4. Evaluate Your Debt
Debt can be a big hurdle in your financial journey. Make a list of all your debts, including:
Credit cards
Student loans
Car loans
Mortgages
Check the interest rates, balances, and monthly payments. Create a plan to pay down debt faster if you can. If your debt feels overwhelming, consider speaking to a financial advisor to help you find the best strategy.
Recommended: Debt Consolidation Calculator
5. Explore Deposit Accounts
Beyond traditional savings accounts, there are other ways to save and grow your money. Deposit accounts like Certificates of Deposit (CDs), Money Market Accounts (MMAs), and Individual Retirement Accounts (IRAs) can offer more benefits depending on your financial goals.
A CD lets you save money at a fixed interest rate for a set period. It can be a good option if you don’t need immediate access to your funds.
MMAs typically offer higher interest rates than regular savings accounts. And an MMA may provide check-writing privileges.
IRAs are ideal for saving for retirement. They may offer tax advantages.
Explore your options to choose the right deposit account setup for your situation.
You might also like: Are CDs a Good Way to Build Wealth?
6. Set Financial Goals
A financial checkup is a good time to set or update your financial goals. Whether it’s buying a home, saving for college, or planning for retirement, your goals help guide your financial decisions.
Make your goals SMART:
Specific. What exactly do you want to achieve?
Measurable. How will you know when you reach it?
Achievable. Is it realistic based on your income and expenses?
Relevant. Does it align with your overall financial plan?
Time-bound: When do you want to achieve this goal?
Once your goals are set, review them regularly to make sure you’re on the right track.
Recommended: Savings Goal Calculator
Create a Brighter Financial Future With Centier by Your Side
Giving yourself a financial checkup is a smart way to make sure your money is working for you. It helps you spot potential problems, improve your financial health, and achieve your financial goals. By following these simple steps, you can take control of your finances and build a stronger financial future.
How healthy are your finances? To explore Centier’s banking solutions for a brighter financial future, book an appointment today.
