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What should I include on my simple financial review agenda?

Do you prefer to learn by watching? We answer this question in a video below. Click here to jump ahead.

Every year many adults have a health maintenance exam or, what is more commonly known as, an annual physical. During these annual physicals your primary doctor goes over all aspects of your health with you to determine if you are on the right track, or if you should make changes toward a healthier lifestyle.

While reviewing your health every year is very important, you should also consider an annual financial check-up as well. Are you on the right track for hitting your short and long-term goals? Do you need to make some changes, or is there something you need to do that you have been postponing?

As the end of the year is nearing, take time out to review everything. If you have a partner, make sure they are invited to the review party as well.

Here are 7 elements you should have on your annual financial review agenda:

1.   Identify and Re-assess Your Short and Long Term Goals

Maybe you haven’t put your short and long term financial goals in writing, or maybe the goals you thought of last year aren’t relevant any longer. First things first, before you review your current financials, you need to figure out your goals. Write them down.

2.   Create a Budget

Go over your bills and bank statements. Are there areas you can cut expenses, such as going out to eat for dinner less often, or maybe skipping the movie theater and go with Netflix instead? Is one of your short term goals a vacation or new car? Review your budget to see where you can find extra funds to help reach your goal easier next year.

3.   Analyze Your Bills

Paying bills has been made easier with the efficiency of automatic payments. These days everything from the mortgage payment to credit card balances can be paid in a “set it and forget it” method. Auto paying directly from your checking or savings account is beneficial because it ensures you never forget a payment, but it also means you might not ever think to review them.

Are there places you could be saving money? What about refinancing your mortgage, or consolidating your credit card debts to the one with the lowest interest rate? Do you have different insurance policies with different carriers? See if perhaps combining both your home and auto insurance with the same company could get you a discount. Also, don’t forget to review your cell phone and cable bills. Are you paying for extras that you don’t even use? Taking the time to examine all your routine expenses can end up saving you a good amount of money.

Advisors recommend putting away at least 15% of your pre-tax income toward your retirement, and as you near retirement, move away from riskier, more aggressive investments, such as growth stocks, toward safer vehicles, such as bonds.

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4.   Look Over Your Taxes

Do you need to adjust your tax withholdings? Are there any deductions you’re missing out on or expenses that can be itemized? Take a look at this article from TurboTax 9 Things You Didn’t Know Were Tax Deductions and see if you may be able to lower your tax bill or increase your refund.

5.   Prepare for the Unexpected

Do you have an emergency fund? You should have enough savings to cover at least 3 to 6 months’ worth of expenses.

Do you have a will in place? You should have in writing what your wishes are in regards to the distribution of your property and assets, and, especially important, who would be the guardians of your minor children if something happened to you.

Do you have life insurance? I’m sure you have heard of families whose lives have financially crumbled from the unexpected loss of a primary breadwinner. Unfortunately, it happens all too often. Term life insurance can be extremely affordable and can save your loved ones from financial struggle if you died prematurely.

If you already have life insurance, be sure to review your coverage. As you age, your life insurance needs change. Buying a house, having a child, getting married, changing jobs, all these events bring on the need to review your policy.

6.   Review Your Retirement Plans

Do your current retirement plans follow your long-term retirement goals? If your employer offers any 401(k) contribution matching benefits, be sure to take advantage of this. This is one of the easiest ways to fund a retirement.

Advisors recommend putting away at least 15% of your pre-tax income toward your retirement, and as you near retirement, move away from riskier, more aggressive investments, such as growth stocks, toward safer vehicles, such as bonds.

7.   Get Your Credit Report

Federal law allows you to obtain a free copy of your credit report every year. Check your credit report regularly to make sure the information in your credit reports is correct. Your financial reputation follows you wherever you go, so be sure to keep it in good standing.

Taking the time to really dig through your financials can be a lot of effort, but make the best of it. Grab a bottle of wine, throw down a plate of cheese and crackers, whatever you need to make it not such a drab affair. Chances are after you are through you’ll feel particularly accomplished and hopefully will even have discovered some ways to save money. With a little work, you’ll be much more prepared to face whatever financial battles may come your way.

 

Photo credit to: JESHOOTS.COM

 

Watch the Annual Financial Review Video

Video Transcript

Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance broker where you can get life insurance on your terms.

I’m Jeanna and I’m Natasha.

Today’s topic:
 
Elements of a simple annual financial review.

 
 
Today we’re talking about simple annual financial reviews.

We just started a new year and it’s a great time for you to sit down and make sure all your financial goals are still in line. And if you have a partner, make sure they’re invited to the financial review party as well.

Today Jeanna and I will talk about seven elements that you should have on your annual financial review agenda.

First, identify and reassess your short and long term goals.

If you didn’t have any goals written down last year take time to put them in writing now. And if you did have goals, did you meet them? If not, are they still relevant for the new year? Decide if you need new ones and then think through a basic strategy.

Second, create a new budget.

Go over your bills and bank statements. Are there areas you can cut expenses? Such as going out to eat less often.

Think about the goals from step one. Review your budget to see where you can find extra funds to help reach your goals easier this year.

Third, analyze your bills.

Paying bills has been made easier with the efficiency of automatic payments. These days, everything from the mortgage payment to credit card balances can be paid in a set it and forget it method. Auto paying directly from your checking or savings account is beneficial because it ensures you never forget a payment. But it also means you might not ever think to review them.

Are there places you could be saving money?

What about refinancing your mortgage? Or consolidating your credit card debts to one with the lowest interest rate. Also, don’t forget to review your cell phone and cable bills. Are you paying for extras that you don’t even use? Taking the time to examine all your routine expenses can end up saving you a good amount of money.

Fourth, prepare your taxes early.

We all have until April 15th to file our taxes, but starting to plan now will save you the stress of trying to gather everything last minute.

Also, take a look at what types of things can be deducted. Who doesn’t want to lower tax bill? We’ll put a link below to an article from TurboTax that talks about frequently overlooked tax deductions.

Fifth, prepare for the unexpected.

There’s more than one aspect of this step.

First, do you have an emergency fund?

The rule of thumb is to have enough cash to cover three to six months of expenses at a moment’s notice.

Do you have a will in place?

You should have in writing what your wishes are in regards to the distribution of your property and assets. And if you have children, a will is especially important. In a will, you state your wishes as to who you want to be the legal guardian of your minor children if something were to happen to you.

Do you have life insurance?

Term life insurance is affordable and can help keep your loved ones from financial struggle if you died unexpectedly.

If you already have life insurance, be sure to review your coverage. As you age, your life insurance needs change. Buying a house, having a child, getting married, changing jobs, all of these events bring on the need to review your life insurance policies.

Sixth, review your retirement plans.

Do your current retirement plans follow your long-term retirement goals?

Does your employer offer to match your 401k contributions? If so, be sure to take advantage of this. It’s one of the easiest ways to fund your retirement.

And, lastly, download your credit reports from all three credit reporting agencies.

Federal law allows you to obtain a free copy of your credit report from each agency (Equifax, Experian, and TransUnion) every year. Check the reports and make sure the information is correct. Your financial reputation follows you wherever you go, so be sure to keep it in good standing.

And don’t feel like you have to do all of these things all in one day. Accomplish them in your own time and once you’re done you’ll feel financially prepared for the new year.

If you have any questions about life insurance, make sure to leave us a comment. And if you’re ready to get quotes, check out Quotacy.com. We’re here to help you find the best deal on the life insurance you want.
 

About the writer

Headshot of Natasha Cornelius, a life insurance writer, for Quotacy, Inc.

Natasha Cornelius

Marketing Content Manager

Natasha is a writer and content editor at Quotacy. She is also co-host of Quotacy’s YouTube series. She can't get enough of life insurance and outside of work is also working toward her Chartered Life Underwriter designation. Connect with her on LinkedIn.