Annual financial checkups are essential. Reflecting on changes in your income, expenses, investments, and savings can offer valuable insights and help you practice financial mindfulness.
We’re sharing a concise but not all-inclusive checklist to help you evaluate seven critical financial metrics so you can assess, adjust, and advance your financial status.
When reviewing your income, think about any changes like a pay raise or side hustle income. On the other hand, make note of any lost revenue, perhaps from scaling back your work hours for a better work-life balance.
Now, look at your spending habits. Are you eating out more or spending more shopping online? Or have you cut subscriptions and taken up your own lawn maintenance rather than outsourcing it? Either way, a shift in income or expenses signals the need for a budget update.
Take a moment to see if there have been any changes regarding your debts such as paying off a credit card or taking out a new loan. If you're facing a lot of debt, start with the highest interest loan and work your way down to lower your total repayment amount.
Next, look at your savings. Are they growing at a healthy rate or stalled out? If your savings progress has stopped, consider these tips:
Cancel unused subscriptions or memberships
Choose generic or store-brand products instead of name brands
Plan meals ahead of time and cook at home to spend less on take out
Refinance high-interest debt to lower monthly payments where there is savings
When it comes to your retirement planning and related investments, you’ll want to check whether you have made any recent changes. You’ll also want to confirm deadlines and if you’re approaching contribution limitations for your retirement accounts. Also, don't forget to review any withdrawal requirements to avoid penalties.
If everything seems in order, consider adjusting your investment portfolio to better match your risk tolerance and financial goals. Both are likely to change from year to year.
When it comes to saving for retirement, think about increasing your contributions for added security down the road. It's always good to speak with a financial professional for personalized guidance.
Significant life events such as getting married, having a baby, or buying a home can significantly impact your finances. For example, getting married might mean combining incomes and expenses while buying a home could mean taking on a mortgage.
These changes can affect your financial strategy, too. If your goals now feel out of reach or you've achieved them sooner than expected, now is the perfect time to update them.
A healthy emergency fund for unexpected costs should equal 3-6 months of living expenses. If yours is short, come up with a plan to bridge the gap.
You’ll also want to keep an eye on your credit score for any significant changes. A good FICO score is 670-739.1 If yours has room for improvement, try to:
Pay a credit card’s monthly balance in full to demonstrate responsible credit use
Become an authorized user on a trusted person's credit card
Apply for different types of credit accounts to diversify your credit mix
Keep your credit card balances low to maintain a favorable credit utilization ratio
Doing taxes and dealing with insurance are definitely not exciting, but they’re both necessary metrics for your financial health.
Start by checking for any changes in your tax situation like your filing status or deductions. This ensures you're taking advantage of all available tax breaks and optimizing your financial situation for the year ahead.
For insurance, make sure your coverage still aligns with your current needs. For example, if you've recently bought a new car or welcomed a new family member, you should adjust your coverage accordingly.2
Consider how economic shifts or higher interest rates have influenced your finances this year. Stay informed by reading financial news websites, following finance thought leaders on social media, or subscribing to newsletters for regular updates.
You should also review any changes in your family. Maybe you got married, had a child, or someone in your family passed away. It's important to update your estate planning documents like your will, power of attorney, and beneficiaries to reflect these changes and ensure your wishes are followed.
As you wrap up your financial review, remember securing your financial future is about more than just checking off boxes. It's about taking proactive steps to protect yourself and your loved ones.
At New York Life, we understand the importance of having a financial strategy. I can help you navigate the complexities of insurance and other financial strategies to ensure you're on the right path toward your goals.
1 “What Is a Good Credit Score and How Do I Get One?” Nerdwallet, November 2023
2 Home / Auto, Liability, Property and Casualty Insurance are not offered by New York Life Insurance Company or its agent.
This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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