Annual Financial Check-Ins Made Easy

Your Family’s Annual Financial Check-Up: A Simplified Approach

by Erica Gellerman, The Worth Project

We all know that an important part of staying physically healthy is getting regular check-ups. Similarly, an important part of staying financially healthy is giving your money regular check-ups as well.

If the idea of diving into the numbers sends you running, don’t worry. It doesn’t have to be that difficult. And maybe with this simplified approach it could almost be…fun?

Whether you take a few hours one afternoon to do all five steps, or do one task a day for five days, this simple approach will have you feeling on top of your money game.

1. Get your financial snapshot

Let’s start by getting a snapshot of your overall financial health. The goal of this step is to get a really good idea of where you are financially. Once you know your starting point, it’s easier to see where you want to make changes.

Grab a piece of paper or open up a spreadsheet program and track down these numbers:

  • What you owe: how much debt do you have? This includes your mortgage, credit card debt, student loans, car loans, and any other money that you need to repay.
  • What you own: do you own a home? A car? Do you have savings accounts, retirement accounts, and any other investment accounts? Make a list of everything you can think of.
  • What you earn, spend, and save: think of this as a high-level overview of a monthly budget. You might have a general idea, but it’s time to put some real numbers down. How much did you make last year? And how much of that money went into savings and investments? According to most financial experts, you’ll want to put at least 15% of your monthly pre-tax income toward savings and investments.

With those numbers in front of you, it will be easier to see if there is anything that needs extra attention, like paying down more debt or saving a higher percentage of your income.

2. Check in on the last year

There are likely some things that you did really well last year and some things that didn’t go so smoothly. Now is the time to identify what to repeat and what to change.

Did you adopt any new spending habits that you’re proud of and want to continue (like bringing lunch to work every Monday)?

Were there any money emergencies that you’d like to be better prepared for? For example, when your property tax bill was due were you scraping together the funds to pay it?

As you’re going through this, remember to be kind to yourself. If you had some missteps or things didn’t go quite like you’d planned, you can create a plan this year to avoid making the same mistakes.

3. New year, new goals

Now comes the fun part: what do you want to achieve this year? Do you want to save a certain amount of money for a down payment on a house? Maybe save up to take the family on a great summer vacation? Or maybe you want to finish paying off your debt so you can breathe a little easier with your monthly budget.

Set your goal and then calculate how you’re going to get there. For example, let’s say you’re eager to finish paying off your $12,000 of lingering student debt. You calculate that to pay it off in the next 12 months, you need to make $1,000 monthly loan payments. With that number in mind you can start brainstorming what you can do or what habits you can create to make that loan payment each month.

4. Review your policies

Now that you’ve taken the time to look at your financial picture and set some new goals, make sure that you’re protecting yourself and your loved ones for the future. Did anything in your life change last year? If so, you’ll want to make sure all of your insurance policies are up to date to protect your assets. Review your homeowners or renters insurance, your health insurance, and your auto insurance.

And don’t forget to take a hard look at whether you have enough life insurance. With Ladder, you’re able to easily ladder up or ladder down your policy. That is, you can add more coverage or reduce coverage based on your current need.

Did you recently purchase a home? Or are you preparing to welcome a new baby? You may want to ladder up by applying for more coverage to ensure enough protection for your family. Or have you recently paid off your mortgage? You may want to consider laddering down to reduce the amount of life insurance you have.

Checking in on your policies at least annually will help to ensure that you keep your assets protected.

5. Check your credit

You’re allowed one free credit report from each reporting agency every 12 months. The new year is a great time to use it. Check to make sure that everything reported is accurate. If you notice anything incorrect, you can alert the credit-reporting agency and dispute any errors.

While you’re checking in on your credit report, also check in on any credit card rewards you might have. Before you plan any big trips for the year, check your reward balances and their expiration dates. If anything is expiring, make a plan to use it before you lose it.

Your financial health is important. Don’t let your annual check-up fall to the bottom of your to-do list. Use these five steps to give yourself a financial check-up today.