Financial Checkup: Tips to organizing your personal finances

February 23, 2023

Whether you’re looking to better understand your expenses, save money, improve your credit, or all of the above, a financial checkup is a good practice to undertake at least once a year. However, there is no need to run to the “finance doctor.” Just like your health, a personal self-assessment is a great place to start.

Review Your Budget

Financial success always revolves around a balanced budget. If you don’t have a budget outlined, then take the time to complete one soon.

If you do have one created, then start your check up with a review of your income and expenses. Note any changes to your household income, along with any new or reduced expenses.

Know Your Debt and Spending Habits.

Assess your credit cards. Credit cards get a bad reputation, and with good reason when not used properly. But when used with discretion and a payoff plan, they are a great financial tool.

• Limit the number of cards you use.
• Know your card balance and target only using 30% of your available credit limit.
• Pay off your balance every month. If you can’t payoff the full balance, pay as much as possible and have a plan set to get the balance down to zero.

Most cards likely have a variable interest rate. In our current market, interest rates are rising, which is also increasing your cards APR and the interest accrued on the balances you carry. Be aware of how much credit card debt you carry and the amount of interest you are accruing and paying.

Check Your Credit.

Stay on top of your credit score and history. Pull a copy of your report on the website annualcreditreport.com. Each of the three main credit reporting agencies are required by federal law to provide you with a free copy of your credit report each year.

Leverage Technology and Automation.

There are plenty of tech tools available to help with managing finances. While each offers unique features, one key technology function to take advantage of is automation.

– Automate your payments. Simplify your monthly bill payment activities. Although not all bill payments can be automated, many can. Setup automatic payments or ACH pulls for your recurring monthly expenses that have a standard recurring cost. This could include mortgage/rent, insurance, phone bill, internet bill, etc.

– Automate your savings. Put money aside every pay period. Once you’ve set your budget, review your expendable income and determine an amount to allocate to your savings. Then automate it so funds are moved to a separate savings account monthly or each pay period before you can spend it.

Check In On Your Retirement Savings

Are you saving for retirement? Experts suggest investing 10% to 20% of your income for retirement savings. If you participate in a 401k or other employer plan, review your current contribution amount. If you can afford to, raise your contribution by at least 1% and make sure you take advantage of any employer match to the fullest extent possible.

These are just a few financial checkup tips, and your assessment will be unique. Be sure to consider other things such as insurance policies, streaming and subscription services (are you using them and worth the cost), and more. Be proactive and stay on top of your finances.