Just as you would visit your doctor once a year to make sure your health is still in check, there’s something else you should be doing before the end of the year — an annual financial checkup.
What Is a Year-End Financial Checkup?
A year-end financial checkup is an opportunity to review how you’ve done financially over the past year and make sure you’re still headed in the right direction when it comes to managing your money. The reason why it’s done towards the end of the year is so that you can take advantage of any tax-savings as you begin to prepare your documents.
7 Ways to Give Yourself a Year-End Financial Checkup
Step 1: Evaluate Your Budget
If you don’t have a budget, now’s the time to start one! If you already have a budget, use this time to review any areas where you came in under/over budget and adjust. Don’t forget to account for any income changes going into the new year!
Step 2: Review Any Major Changes in Your Life
According to AAFMAA Wealth Management & Trust (AWM&T), military families should consider a strategy revamp after one of the following life changes: military transition, retirement, marriage or divorce, the birth of children or grandchildren, buying or selling property, illness or hospitalization, receiving an inheritance, having a family member in long-term care, or losing a family member.
Step 3: Evaluate Progress Toward Financial Goals and Adjust
The third step in your financial checkup is evaluating your financial goals. Have you made progress on them this year? If not, where have you fallen short? Can you figure out why? Have your goals changed during the year? If so, revise them and write them down.
If you’re feeling a bit lost as to what your financial goals should be, here are some ideas:
- Create/increase your emergency fund
- Start saving for retirement
- Pay off debt
- Increase your credit score
- Save for a trip or big ticket item
Step 4: Determine if Your Insurance Levels Are Appropriate
Consider how well you’re protecting your assets and legacy. The end of the year is the perfect time to re-evaluate your life insurance, disability insurance, homeowners or renter’s insurance, health insurance, and pet care insurance (if needed).
Step 5: Check Your Credit Report and Report Any Errors
The three main credit reporting companies, Equifax, Experian, and TransUnion, are required to provide you with a free credit report each year upon your request. Visit AnnualCreditReport.com to request your free copy and be sure to check for any errors so that you’re able to report them immediately.
Step 6: Evaluate Your Retirement Fund and Adjust Contributions
Another thing you should be looking at is your retirement fund. Take advantage of any company matches you may have access to and check to make sure you’re on track to retire at your target age with savings that will last. If you’ve recently gotten a promotion or raise, consider increasing your contributions.
Step 7: Review Other Factors
AAFMAA Wealth Management & Trust (AWM&T) listed 15 factors to consider when giving yourself a year-end financial checkup, including the basics like income, expenses, assets, debt, and savings; plus some that you may not have thought of.
When Should You Consult with a Professional?
Just like the doctors who perform your yearly checkup, the team of military financial experts at AAFMAA Wealth Management & Trust (AWM&T) can assist with your financial checkup by assessing your financial health and customizing a personalized action plan. They even offer a complimentary portfolio review for the military community.
Other Tips to Keep Your Finances In-Check For the New Year
Solutions for Your Military Family:
Life Insurance, Wealth Management, Home Mortgages, Survivor Services, and more. Learn more about AAFMAA.