Time For a Financial Check Up
That time I got a financial checkup, Budgeting, insurance and investments are all key elements that benefit from regular review.
Sometimes in life to stay on track, you have to do things that aren’t fun. Whether it’s an annual trip to the dentist or spring cleaning, certain activities have long term benefits that are reaped by sucking it up and doing what you have to do for a few hours once or twice a year.
If you hate personal finance and avoid all things money (other than just making and spending it), it’s time to put your foot down and get your mid-year financial checkup on.
That time I got a financial checkup:
You should really keep an eye on your finances at least monthly, but even if you are vigilant about budgeting and using every frugal trick up your sleeve, there are still certain items you should review at least once a year. Even regular brushers and flossers can still get cavities – those regular dental visits minimize how often they appear and make it easy to take care of them when they are there before they turn into root canals.
Step One: Budget
Step Two: Insurance
Step Three: Investments
This is the first step in your personal finance journey. Review your existing budget and make sure it still makes sense. When you’re new to sorting out your finances, it’s easy to set your budget and, once you’re actually staying within its confines, forget about it. Here is a checklist and a few tips that I do every year before it hits tax season to get my finances in order. also check out www.feedthepig.com
1. Review Your Credit Report
By law, you’re entitled to order one free credit report yearly from each of the three major credit bureaus. You can get yours at no cost from annualcreditreport.com. Make sure your credit reports are free of mistakes. Under the Fair Credit Reporting Act, both the credit reporting agency and the information provider (that is, the person, company, or organization that provides information about you to a credit reporting agency) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the credit reporting agency and the information provider.
Unfortunately, the majority of adults in America don’t review their credit report yearly.
Learn more about credit reports, credit scores and fixing credit report errors by clicking here.
2. Organize and/or Shred Old Financial Documents
Sort through your statements, pay stubs, bills and other financial records, and keep only the documents that are absolutely necessary. Since the IRS has up to six years to audit you, keep your tax returns, canceled checks and receipts, and any records supporting your tax deduction for at least six years. If you’re unsure about whether you should get rid of certain types of receipts, scan them or make a copy, then go ahead and shred the rest. But don’t simply toss paperwork in the trash. Leaving important documents in the trash without properly shredding them is a bad idea. They are just waiting to be picked up by an identity thief.
Reducing paper clutter will not only help you stay more organized, it will also put your mind at ease. Plus, since the IRS accepts scanned copies of receipts, having those records available could come in handy in the event of an audit.
Contact your local credit union to find out if they host an annual shred day or event.
3. Record Your Financial Passwords and Store Records in a Safe Place
Make sure you’re not using the same password and log in information for all your online bank accounts and other financial accounts. Even though you might be logging in over a secure Internet connection, there’s still a risk that someone who figures out your password will attempt to access other accounts with the same log in information.
Protect yourself against identity theft by logging your financial passwords in a password protected or encrypted document and storing it in a safe place. Also, important financial documents like a will, stocks certificates or bonds should be put in a safe place like a locked box or an online secure vault.To learn more about preventing identity theft, click here.
4. Review your Budget
Is your budget up to date? Have you incorporated any increases or decreases in your income? Take a close look at your budget to see if you need to make any modifications. Make sure you’re reporting expenses accurately and have made some room for savings account contributions. Use a Personal Budget Worksheet to help organize your finances.
5. Set up Automatic Bill Pay
Spring cleaning isn’t only about de-cluttering – it’s also about making things more efficient. Set up automatic bill pay, and link it to your primary checking account. Automatic bill pay will eliminate the chances of missing a payment and paying those pesky late fees.
6. Pay off Holiday Debt Once and for All
What does your current debt load look like? Spring is a good time to look at your total outstanding debts and see which loans or credit cards you could pay off entirely this year. At the very least, put yourself on a stricter debt payoff plan, and pay off any debt you accumulated over the holidays. Cleaning up this debt quickly can put you in a much better financial position for the rest of the year.