It's Easy to Give Yourself a Financial Checkup — Here's How

by Kate Ashford |September 19, 2023

Finances are like a garden; if you're not paying attention to them, you might miss small issues that can crop up like weeds and grow bigger. That's why conducting a financial checkup is a smart idea. All it takes is a little time and guidance on what to dig into.

Regularly monitoring your checking account is helpful, of course, but doing this deeper dive at least once a year can help you manage your money even better. For a well-rounded analysis, ask yourself these six financial questions.

A customer meets with a financial planner to review her investments

How's my credit score?

A credit score is the main indicator of your financial behavior to a lender. It shows how likely you are to repay debt or make payments on time. Because lenders look at this number to determine whether they'll give you a loan (for a car or credit card, for example), having a good score — typically 670 or higher — is extremely helpful. If your score is lower than this, you may be able to successfully get a credit card or a loan, but the interest will likely be far higher than it would be for people with good credit.

Keep in mind that credit scores depend on good credit reports. This means you'll want to occasionally read over your credit report to spot any potential issues such as erroneous information or missed payments, which can drag down your score. Visit AnnualCreditReport.com for a free copy of your credit report; you're entitled by law to receive one from each of three major credit reporting agencies — Equifax®, Experian® and TransUnion® — once a year.


Am I paying off my debt the right way?

Most people carry at least some debt, such as a mortgage, car payments or student loans. The key is not only committing to paying it down but also making sure you have an actual paying-off-debt plan that you're carrying out.

There's no magic number for the maximum amount of debt anyone should have, says Lisa Whitley, a Washington, D.C.-based accredited financial counselor and chartered retirement planning counselor. But there is a difference in types of debt. If you have a mortgage or a car loan that you're easily paying off every month, this is "good" debt, according to Whitley. It's the "bad" debt that needs to be taken care of, she adds. For instance, if you've taken out a high-interest payday loan, you'd want to pay that off as soon as possible to avoid the mounting fees that can plunge you deeper into debt.

A couple meets with a financial advisor in their home

Am I saving enough?

Even if you are dedicating funds to paying down debt, building up your savings at the same time is also important for your financial future. Consider setting aside money in these three buckets:

  • An emergency fund. If you aren't reserving any amount for big, unplanned purchases, like new brakes for your car, you may end up having to borrow money to fix them, which can increase your debt. Generally, experts suggest trying to save at least three to six months' worth of expenses, even if you have to start small and build this up gradually. This can ensure that, if you lose your job or have unexpected costs (for a medical need or otherwise), you could temporarily live off your savings.
  • Retirement accounts. You should be saving for your retirement, even if it seems like a long way off, because the more time you have to save, the more money you can accrue through employer-sponsored retirement programs such as a 401(k) or 403(b) plans or an Individual Retirement Account (IRA) to cover your living expenses. Keep in mind that the average benefit amount paid monthly by the Social Security Administration is currently $1,703.98 which may not meet all your needs.
  • A savings account. Consider creating a savings account to cover expenses that aren't necessarily an emergency but are nonetheless important to pay, like a replacement kitchen appliance or your child's overnight class trip.

Am I investing wisely?

If you have retirement accounts set up or other investments (certificates of deposit, money market accounts, mutual funds or stocks, for example), you'll want to look at them, on your own or with a pro, to make sure they're on track and growing your retirement fund. If you don't, this could be a good time to talk to a financial advisor, who can advise you on making investments that could help build wealth for your retirement or, say, a down payment on a house.

But before you do this, Whitley says, review your objective goals — for example, having enough income for your kids' college education, for your retirement or to put toward a business you've always dreamed of running. Ask yourself: Have your priorities changed? Has your time horizon shortened or lengthened? Have circumstances shifted, affecting how you intend to use this money in the future? If so, you may want to save even more money or reallocate what you're putting into your various goal-focused buckets (say, education, retirement or new business). "Notice that none of these questions have to do with market performance," Whitley says. "You are on the right track when your portfolio matches your investment goals and that does not change with the ups and downs of the market."

It's worth noting that if investing isn't on the table for you right now, opening an interest-bearing savings account can be a good entry point. You can contribute money to it on a schedule, such as at every pay period or monthly. Once that habit is established, you might want to consider more advanced investing.

Do I have enough insurance?

It's easy to forget that insurance is a form of money management. "Insurance in some form or another has existed in human society for millennia for the simple reason that without it, we would not be able to afford to take any risk in our lives," Whitley says. "Without insurance, you have no option other than to absorb the economic consequences of risk yourself."

Consider homeowner's insurance, for example: If you didn't have it, "could you save enough money to hold in reserve to rebuild your home?" Whitley asks. "Most people cannot, so insurance is a form of leverage that allows you to spend a smaller amount of money, the premium, to guard against a risk that you would not be able to absorb on your own."

Look over your current insurance policies to determine whether they offer you enough coverage. If, potentially, they don't, you may want to discuss that with an insurance broker and ultimately change your policy so that you're well protected. Your premiums would then go up, but paying a bit more in the short term may be worth it if it decreases the risk of leaving yourself or your family lacking sufficient coverage in the future. You might also want to explore insurance policies you don't already have, such disability or long-term care (this may cover home health care or assisted living home expenses) and think through how these might protect your finances if something were to happen to you.

What estate planning should I be doing?

This is another form of financial planning that is commonly overlooked since it requires thinking about topics many of us would rather not consider. It's important, however, because if you pass on without legal documentation such as a will, the courts in your state will decide who gets what, and this can create a mess of red tape for your relatives. Whitley advises thinking about reviewing an estate plan or starting one to make sure your affairs are in order. "An estate plan does you, as the deceased, no good at all," she says. "It is an act of love for the people you leave behind."

— With additional reporting by Geoff Williams and Life and Money by Citi editors

Kate Ashford

loves helping to answer questions about finances. Her work has appeared in Money, Parents and Forbes.com.

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