You go to the doctor for your annual turn to make sure your body is healthy. But when was the last time you got a check on your financial health?
It is important to know how well you are managing your money and where you can make changes for the better. Without a regular financial check, you may keep repeating bad money moves, like giving in to petty motivation buys Or pay only the minimum on your credit cards.
Here’s how to check and improve your financial health.
11 steps to complete your financial examination
1. Update your budget
Budgets should not be fixed. Jump in and tune in if it doesn’t work for you
Increase or decrease your various spending limits Budget Categories So that it fits your current priorities and desires. test file budget method or combine a couple to create your own money management plan, Just like this woman did.
2. Track your spending
Do you often wonder where all your money is going? If so, recording every dollar you spend will give you some insight.
Exercise Track your spending for a month, but don’t just include the dollar amounts and what you bought. Make notes about why you made the purchase and how you felt about it.
Kakeibo It is a budgeting method that includes vigilance about spending.
If you’re overspending on takeaways during the workweek because you’re too tired to cook, this could be a sign you’re starting Meal preparation. If you love how it feels after temporarily attending a yoga class and realize you want to do it more frequently, you can save money with a monthly pass instead of paying per session.
3. Reduce your fixed expenses
Your fixed costs—the unchanging amount you pay for things like rent, cell phone service, and car insurance—may seem inflexible, but they don’t have to be. Find competitor rates to negotiate your bills with your current service provider or to switch to a new one.
When it comes to housing costs, having a roommate can significantly reduce these fixed expenses. just make sure Screening all potential roommates So you don’t end up failing. Or if you’re cool with funky stuff, this Alternative housing options It can help you save money.
4. Add to your emergency fund
An unexpected crisis can arise at any time. having a file emergency fund It makes those situations less stressful.
During your financial check, review how much money you have set aside for emergencies. Many experts recommend saving three to six months of expenses, but others do call for more Especially after so many people’s savings were wiped out during the Covid-19 pandemic.
If you have less, make a plan to add it to your savings next year.
5. Check your progress on other savings goals
Even if you automate your savings for, say, an upcoming vacation or a down payment for a home, your goals aren’t something to set and forget. Use this financial examination time to see how close – or far – you are from achieving these goals.
6. Evaluate your retirement contributions
Although retirement may seem a long way off, the best time to start saving is now. Retirement accounts grow the more time you give them to take advantage of them compound interest.
Are you interviewing an employer 401(k) match? Did you increase your retirement contributions the last time you got a raise? Can you free up more of each paycheck to transfer to your retirement account, even if it’s just an extra $25?
Every little bit helps.
7. Evaluate your debt repayment plan
There are different ways to handle debt repayment. Use this financial check to determine if your current payment plan is working for you.
If you want to have the satisfaction of liquidating an entire credit card balance, then snowball method Paying off debt focuses on the smallest balances first. If you want to attack debt with a huge interest rate, try ، Avalanche method.
8. Improve your credit score
Your credit score is important when it comes to things like getting a loan or renting an apartment. A lower credit score can mean rejection — or a higher interest or security deposit payment.
Conversely, the higher your score, the less you will have to pay.
you may Raise your credit score By paying off your existing loan and credit card balance, not incurring additional debt, requesting increases in your credit card limit and paying your bills on time.
9. Withdraw your credit report
is yours credit report It delves into the reasons behind a three-digit credit score. It details who you owe, the amount of recent credit inquiries and if you have any debts that have gone into collections.
You can get a free copy of your credit report from all three credit reporting bureaus – Experian, Equifax and Transunion – once a year at www.annualcreditreport.com.
Review your credit reports to check for inaccuracies. If something is on your report in error, you can dispute it with the credit bureau and possibly raise your credit score.
10. Update your CV
Stay ready to jump at a great job opportunity by keeping an updated resume.
And while you make sure your resume is in perfect condition, here are some tips about it How to write a winning cover letter.
11. Protect your assets
To maintain good financial health, it’s smart to have a contingency plan if something goes wrong.
Disability insurance allows you to collect income when you are sick or injured and cannot work. house, houseAnd the tenants And the car insurance Pay to repair or replace your property after an accident or disaster. life insurance Take care of your family in the event of your death.
Review your various policies to make sure you get the coverage you need.
Nicole Dow is a senior writer for The Penny Hoarder.