With the end of year in sight, many are planning for next year and beyond. As we make plans and dream of what is to come, it’s important to take a step back and look at your whole financial picture – annually at a minimum. Doing a year-end financial checkup can help you head into the new year feeling in control of your finances, rather than the other way around.
Why is a financial review important?
Just as we should do regular preventative healthcare exams with your physician, your financial health needs the same level of attention. A financial review will give you insight into the past, present, and future of your financial health, if done correctly.
How often should you do a financial review?
Financial reviews should be done annually at a minimum, but there should be some sort of review process at least quarterly to catch things that may be getting off track before it’s too late.
Who should be part of the financial review?
You get to choose who to involve in your financial review, but it can be helpful to at least check in with your financial planner, banker, accountants, or other financial professionals you use. Checking in with them as part of the review process can help gain perspective in their area of expertise. Asking them questions ahead of your financial review like “Is there anything you see in our account that is concerning?” and “Would you recommend we make any changes at this time that may help us in the future?”
The Financial Review Process
1. Assess your goals. Begin with the end in mind. Before you even start reviewing your asset or debt balances, think about what you want now and in the future. What’s important to you? If it’s always been a dream to purchase a house before you’re 30, your financial review may take a different path than if you are wanting to retire in the next 5 years. Beginning with where you want to end up will help you in the financial review process.
2. Evaluate your spending. Take a look at your last year of spending. Look at your credit card statements, bank transactions, and money-transfer account (Venmo, Apple Pay, etc.). Once you get a feel for those ‘categories’ of spending like restaurants, travel, etc, you can make decisions on how much you value these things. Decide what you want to start spending on (more groceries and less restaurants?), stop spending on (maybe you want to cut the cable cord to save some money?), and keep spending on (whatever is really important to you should fall here).
3. Evaluate your subscriptions. Subscriptions can be a tricky money pit to fall into. At face value, $7 a month here and $12 a month there isn’t so bad, but when you add up multiple subscriptions every month, it can really add up! Plus, subscription costs often increase over time, and you may not even notice! Evaluating the value of these subscriptions annually can help you keep that in check.
4. Consider your retirement portfolio. Even if you’re not close to retirement age, saving for retirement is vital. Ensure your retirement portfolio has both pre- and post-tax accounts. Think about the age at which you want to retire and adjust your savings accordingly. If you’re hoping to retire early, you might want to be more aggressive with your savings.
5. Check your credit report. You should get your credit report at least annually. Running your credit report will give you details about all the accounts you have open (maybe you forgot that one you opened at college orientation?) and will help you protect your financial identity and health. Pro Tip: you can access your report for free at: com
6. Set new goals. Based on what you saw from your financial review, set new short, mid, and long-term goals. Your short-term goals should aid in getting you to your long-term goals. For instance, if you want to buy a house in 5 years, your short-term goal might be saving $300 a month towards a down payment. Write these goals down and put them somewhere you’ll be reminded of them often. You can do this!
Doing a financial review doesn’t have to be intimidating or daunting, it can be a fun way to check in on how things are going and dream about how you want things to go! Plus, doing regular reviews will help ensure that things don’t get lost in the shuffle like fees or un-needed subscriptions.
If you need help with a financial review, please contact one of our bankers to talk through the process and help you along the way!