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What’s a Financial Checkup and Do I Need One?

April 1, 2022

Meeting with smiling woman consulting with another

When you go to the doctor for an annual physical, to the dentist for a teeth cleaning, or bring your car in for an oil change, you're prioritizing things like health, maintenance, and wellbeing. But when it comes to your personal finances—how often are you getting a checkup?  

What is a Financial Checkup?
A financial checkup, or a financial review,  is an examination of your personal finances—everything from your current budget, debts, retirement contributions and more—and can be done yourself or by meeting with a financial expert at your local Centier Bank branch. A financial expert can guide you toward building a plan to meet your financial goals.

Experts recommend scheduling a meeting once a year to review your current financial standing and reevaluate your goals. It’s never too late or too early to sit down and assess your finances with your banker. Establishing a relationship is going to be beneficial as the years go on, and you can decide together what time of year is best for you to meet.

Centier Bank conducts financial check-ups at our branches! Set up an appointment today by calling your local branch or booking an appointment online.

Depending on where you are in your financial journey, some of the most common things people do during a financial checkup are the following:

  1. Take Financial Inventory: You can’t identify where you want to go unless you understand how you got here. Sitting down with your account statements and examining your spending habits against your monthly budget can identify areas in which you can save more and cut unnecessary expenses. Discover your debt-to-income ratio. Add up your monthly loan payments (mortgage, car, student loan) and divide that number by your gross monthly income, and multiply it by 100. Experts recommend a debt-to-income ratio below 30 percent per account and accumulatively. This number affects your credit score and how you might qualify for future loans, mobile phone contracts, etc.

    Are you spending 20% of your monthly income on dining out, when you are falling behind on your student loan payment? That might be an opportunity to consider a change in spending habits. Categorize your spending to uncover trends and look for areas where you can cut back or even consolidate debt. Also, take note of how you spend your money—is it via debit card, credit card, cash, checks, or e-pay? Having multiple methods of payment can make keeping track of your spending confusing.

  2. Budget, Seriously: More than half of Americans spend more than they earn in a given month--or break even. Living paycheck to paycheck can slowly chip away at your mental health and keep you in a constant state of stress. Creating a budget to manage your bills and expenses can reduce financial stress and help you reach your financial goals. Begin tracking every penny you spend in a notebook to get a realistic picture of how you are spending your money. If you are partnered, make sure the lines of communication are open with your significant other, as this will alleviate any stress along the way.

  3. Set Short Term Financial Goals: Are you hoping to buy a home one day or just hoping to build emergency savings to cover unexpected expenses? How about both? Whatever your short-term goals might be—you can achieve all of them with the right plan in place. There is no reason to have a savings account unless you have a reason to save. Ask yourself three questions:

    --What am I saving for? Are you saving for a new car, vacation, home, school? Be specific on what your specific savings goals are. This will not only help you visualize reaching your goals, but it will keep you diligently working toward a tangible outcome instead of setting yourself up for failure.
    --When do I want to accomplish these goals? Assign a date to each goal to promote personal accountability.
    --How much money should I attach to each goal? The more specific your amount, the better chances you have at achieving your desired outcome.

    Experts recommend opening multiple savings accounts to save toward each goal. While it might seem overwhelming, all it takes is a little bit of organization, and you’re well on your way. Think of them less as savings accounts and more like “buckets.” One account (or bucket) is for emergency funds, another can be for a dream vacation—you get the idea. Set practical, measurable, and achievable goals for yourself and stay committed. Saving even a few dollars a week or a month can add up over time. And pro tip: Don’t look for those quick chemical highs after you buy a pair of shoes you don’t need! Rather, shift your mindset by placing importance on the delayed gratification that comes from saving.

  4. Set Long Term Financial Goals: Set your sights on retirement and figure out if investing is right for you. A fiduciary advisor can help answer questions about retirement accounts and other types of investments and point you in the right direction on how you can develop a long-term financial investment strategy. Until you find the right advisor, start asking your friends and family what route they took and what worked for them. Crowdsourcing can help answer questions—or even answer ones you didn’t know you had, so you can be better prepared during your appointment.

  5. Monitor Your Performance: Once your new plan is implemented, and you are managing your money consciously, take note! Check-in with your stress levels, and your bank accounts regularly to make sure you’re noting improvements. Changing habits is always difficult at first, especially when it comes to money. Treat it as you would changing eating habits or working toward a more healthful lifestyle altogether. Celebrate milestones and congratulate yourself! Also, be sure to take notes and keep your questions logged for your next meeting with your banker.

It is worth noting that some of these key steps might be tasks you have been avoiding for some time, and therefore might be uncomfortable to face. That’s a typical, normal response to something like this. Just remember that these steps are necessary in order to help you prioritize accordingly and put you on the path to financial success! For more free resources, e-courses, and tips, head over to our Financial Education page by clicking here.