Posted by Carmen Garcia

How To Conduct a Financial Checkup

How To Conduct a Financial Checkup

Most experts suggest that you undergo a regular financial examination every year or after a major life event (such as getting married or a divorce). It is important to follow a system when examining your finances to ensure that you do not lose anything critical to your financial well-being. These are the main topics that you must face during a financial review.

Life Changes

Examine the major changes in your life that have occurred since the last financial review. Have you changed jobs, married, divorced, received a new family member, bought a house, bought a car, moved, or retired? Each of these life events can cause changes in the overall financial situation. As you go through the financial checkup, think about how these life changes can affect your plans.

Financial Plans

Your budget is a model for recurring management of your income and expenses. A budget must be monitored and adjusted every month. The goal is to ensure you have enough income to cover all of your expenses and have enough funds to meet your financial goals. You can write your budget with a pen and paper, using a computer spreadsheet, or one of the several free or low-cost programs available. 

Financial Targets

Financial goals are simply financial goals with a plan in place to achieve them. The creation of a pension fund is an example of a financial objective. Others include setting up an emergency fund, saving an advance on a car or house, or anything else that requires money that you don't already have. Measure your progress towards your financial goals and adjust them if necessary. After reaching a goal, stroke it out and replace it with another. 

Credit Report and Score

Federal law obligates the three major credit reporting companies, Equifax, Experian, and TransUnion, to provide a free copy of their credit report annually. Obtain your reports on Check for errors and report any detected errors immediately. Credit reporting agencies are not obligated to provide a Free (FICO) Credit Score, but you can get it at a reasonable cost. Some banks and other websites offer free credit scores, but not all are official FICO scores. Use the tips that come with your reports to increase your credit score. 


Check your progress on all debts, including loans and credit cards. If your debt increases, especially your credit card debt, it may be time to adjust your expenses so that these balances start to decrease again. Two popular methods of debt relief are the snowball method and the avalanche method. Evaluate interest rates for everything from your mortgage to your car loan and credit cards. Consider switching to another credit card at a lower rate or refinancing. 

Pension Savings

As part of your financial analysis, assess your contributions to your company's 401(k) plan. Make sure to maximize all correspondence with your employer. Consider creating a traditional IRA or Roth. The benefit of a Roth IRA is the tax diversification that results from tax-free withdrawals in the event of retirement. Evaluate your return on investment and rebalance your portfolio if necessary. Consider changing your risk tolerance, both with age and with the market becoming more volatile (or less) volatile. In general, experts agree that your goal should be to introduce at least 15% of your pre-tax income into the pension economy. 

Other Savings

Analyze your progress towards other savings targets, such as an emergency fund covering 30 to 90 days of living expenses, college savings funds (Coverdell ESA or 529), or vacation funds. If you need to use your emergency funds to repair your home or car, plan to replace them as soon as possible. Also, check the available interest rates to ensure your savings are directed to the highest possible income accounts.


The need for insurance changes over time. Ensure you have adequate life, disability (income protection), and home or tenant insurance, including flood insurance, if available at your location. Reassess your health insurance needs, including taking out long-term insurance, if necessary. Consider switching insurance companies or increasing auto and home insurance deductibles to lower your premiums. You can also save money by consolidating policies into a business.


The Tax and Jobs Acts (TCJA), adopted at the end of 2017, can significantly impact your taxes. The IRS suggests that taxpayers make payment charges using the withholding calculator and modify the withholding (W4). If you are self-employed (even part-time), be sure to reassess your estimated quarterly payments as part of your financial analysis. Make sure you have documentation of all tax or credit deductions for retirement or education, paid care, medical bills, and donations. Pay attention to the conditions of deductions and retirement contributions and, in general, keep all the tax documents together. You can schedule a meeting with your tax advisor to plan your tax strategy as part of the financial review. 

Real Estate Plan

Evaluate or create your real estate plan. Examine your availability or confidence to make sure that you are satisfied with your choice of trustee or executor and anyone who has received a power of attorney. Examine recipients and missions to make sure they match your current wishes. Evaluate your desire to live or other planned directions. If necessary, hire a real estate planning lawyer to ensure that you comply with all applicable national and federal laws with any changes made.


After completing the financial review, you can consult one or more experts, including a trusted financial advisor or another specialist such as a real estate planning lawyer, insurance agent, tax advisor, to make sure you have not left out an important part. Write down any changes you decide to make after the review and make a plan to make those changes as soon as possible.

Carmen Garcia
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