Plan for Tomorrow | Conducting a yearly financial checkup
A woman looks at her computer screen while reviewing her finances.

Conducting a yearly financial checkup

Sep 20, 2023, 7:48:14 PM | Reading Time: 4 minutes

You likely schedule an appointment with your doctor every year to check in on your health and discuss any issues. The same habit should apply to your finances as well. Reviewing your budget, expenses, and overall financial plan yearly can help determine if your money management practices are on track or could use a tune-up. Use this checklist to help conduct an annual financial checkup and monitor your progress from last year.

1. Pinpoint your goals

To get your financial checkup rolling, start by reviewing the short-term and long-term financial goals you set last year. Your goals act as important checkpoints to gauge your financial progress and can help you determine if any changes need to be made. Did you miss the mark on any goals and why? Do all of your goals still make sense or do you need to make any updates? Remember that as life changes, your goals will often change too. This is why checking in every year can allow you to recalibrate and update your plan to financially stay on track.

2. Calculate your debts

Evaluating your debts and how much you owe is an important step in your financial checkup. Common types of debt include your mortgage, medical bills, credit cards, car loans, student loans, and any other personal loans. Ideally, your total level of debt should be declining each year. If not, determine how you can adjust your budget to put more money toward paying down balances. There are many different strategies for paying off debt—like paying more than the minimum or paying more than monthly—find a method that works best for you.

3. Examine your budget

Think of your budget as your friend, not your foe, since it can be essential to helping you effectively pay off debt and create financial stability. Working to support the goals you set each year, your budget can provide a framework for you to prioritize your spending and knock down debt. Even if you didn’t make a budget last year, you can create one now. By using a software app, a spreadsheet, or pen on paper to map out your budget, you can better track your income vs expenses and determine if certain items need to be cut or adjusted.

4. Review your retirement strategy

No matter your current age or when you plan to retire, reviewing your retirement plan every year can help make sure you have a strategy that matches your goals. Think about any lifestyle changes or life events in the past year. Do new goals need to be added or removed from your list? Has your expected retirement age changed? Having a diverse retirement portfolio can help ensure you have enough income to maintain your desired lifestyle in your golden years, so see if there are other savings options you may want to consider. For instance, if you’ve maxed out your 401(k) contributions, there are certain life insurance and annuity options that may help you save more for retirement. Talking to a financial professional can help you zero in on the most suitable solutions to match your goals and help build your nest egg.

5. Assess your insurance coverage

From auto and home insurance to renters or life insurance, reviewing your current policies every year can help ensure the coverage you have in place is still in line with your current financial circumstances. Your policies may no longer be adequate for your current financial level or if any life events have happened in the past year, adjustments may be necessary. For example, many life events provide a good opportunity to review your life insurance policy. By regularly evaluating your insurance coverage, you can be assured you have the appropriate benefits you need to protect yourself and your loved ones.

6. Review your will

Updating your final arrangements is also an important step in your yearly financial review. Don’t worry if you do not have a will in place. There is online software and resources to help create one, especially if you have a simple estate plan. Think about any relationships or circumstances that have changed this year or if beneficiaries need to be updated on your life insurance policies. Do you have enough life insurance coverage in place or do you need to supplement your current policy? Your financial professional can sit down with you to ask questions, review life events, and ensure your loved ones are financially protected. Keeping your financial health in peak shape takes work and dedication, just like you would maintain your physical and mental well-being. When you prioritize money management and check in regularly to review your financial plan, you help lower money-related worries and keep your savings goals on track. Set a calendar reminder for the same time each year so you won’t miss the opportunity to check in financially and keep yourself on the right path to success.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.


REV 10/2022