Financial Checkup – 12 Steps to your Financial Health in 2015


It is a New Year and time to give your finances a personal checkup!  See the list of items below that should be done at the beginning of each year:

1. Set Financial Goals for 2015

It may be big items such as saving for a down payment on a home or smaller items like increasing your savings.  It is important to set goals and write these down to make yourself accountable.

2. Check your will and retirement account beneficiaries

Confirm the current selection of beneficiaries, executor, and guardian/trustee (if you have minor children).

  • Create will, durable power of attorney, durable power of attorney for health care and living will if you don’t have one.
  • Notify someone you trust (executor) of the location of these important documents in case something happens to you.

Consult with an estate attorney if you have questions.

3. Set up an income/expense tracking tool is free, and a relatively easy way to track your spending and savings.  Also, consider automating your savings by contributing a set amount each month to your investment/savings accounts.  It is harder to spend it if you don’t have it.

4. Emergency money

Make sure you have access to cash in case of an emergency.  This should be at least 3 months of your expenses and examples of cash include: a home equity line, bank accounts, taxable investment accounts and Roth IRA contributions can be withdrawn tax and penalty-free.

5. Company matching contributions

Contribute to your 401(k) plan or similar type of Qualified Plan (e.g. 403b, Simple IRA, etc.), at least up to the amount the company matches.  It is FREE money!

6. Review your investment portfolio

Determine your current asset allocation between stocks, bond and cash.  In addition, it is important to track your performance and maintain a consistent strategy for the long-term.

7. Roth IRA

Contribute to a Roth IRA if your income is within the IRS limits.  You can still contribute for 2014 until April 15, 2015.

8. Pay down credit cards

Pay down high interest rate credit cards.  The longer you take to pay off the card, the more money it costs you.  Start with the most expensive, or highest interest rate, debt first.

9. Order a Free Credit Report

It is good idea to check your credit report for errors once a year and it is free.  Especially if you are considering buying a home in the near future and will need a mortgage.

11.  Review your life insurance needs

You may have a loved one whose well-being depends on your income.  If so, we recommend term life insurance as the most affordable coverage at the cheapest cost.  Review existing policies for death benefit amount, premium cost, term of policy and beneficiaries.

12.  Spend less than you make.

It is a simple, but challenging goal for many.  You don’t have to keep up with the Joneses.

Most importantly…

Talk to a financial planner if you are confused or uncertain about any of the items above.  Fee-only firms like Financial Symmetry are focused on your interests first, and do not sell products.

Photo credit: 401(K) 2013

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