Here are 8 tips to help you conduct a financial checkup.
1. Review your budget
A financial checkup starts with reviewing your budget or creating a budget if you don’t have one. A budget tracks money going in and out—it’s also a living document that can change as your income and expenses fluctuate. That’s why it’s a good idea to audit your budget regularly and make sure the way you’re spending money aligns with your goals.
2. Check your credit score
The next step in your financial audit is reviewing your credit health. Your credit score is important because creditors use it to decide if you qualify to borrow and at what interest rate. Checking your credit score and reports can help you identify errors or fraudulent accounts. And you can identify areas where you could make score improvements. For example, paying off credit card debt to reduce your credit usage is one move that can help your score.
3. Determine your debt
Another key piece of any financial audit is understanding debt and coming up with a plan to pay down debt. Our lenders would be happy to council you on your debt.
4. Don’t over tax yourself
Are you taking advantage of all the tax breaks? Also, should you adjust your W-4 so that you’re closer to even when April comes?
5. Evaluate your insurance
Make sure you’re factoring in any big life changes and adjusting your coverage accordingly.
6. Save for an emergency
You can’t predict life’s twists and turns, but you can prepare for them. It is recommended to have enough savings for about six months’ worth of expenses. If that sounds like a lot to build up, start small. Our Digital Banking allows for easy scheduled transfers.
7. Review your investment and retirement plans
Making sure you have a diversified portfolio is key to long-term financial wellness. If you’re just starting out, talk to a financial advisor about investing in the stock market. Ensure you’re also personally investing in your future by creating or adding to your 401(k) or retirement savings plan each month.
8. Allow an occasional splurge
Spending too much on nonessential things can set you back. However, it’s unrealistic to cut out extra spending entirely. The key is to find the right balance of saving and spending for your success.
A financial checkup isn’t meant to get you feeling down about money, so if you’re not where you want to be, give yourself grace. After auditing where you stand, you can build better money habits and financial literacy over time. And by giving yourself a financial checkup regularly, you’ll know if you’re on track to meeting your goals or if you need to make adjustments.