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Here's why a financial checkup matters and when to get started

·Miranda Marquit for Achieve

A piggy bank illustrated with financial checkup graphics as a concept of financial planning. — Natalya Kosarevich // Shutterstock
A piggy bank illustrated with financial checkup graphics as a concept of financial planning. — Natalya Kosarevich // Shutterstock
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Any time of year is a great time for a financial checkup.  

A financial checkup can tell you whether you’re still on track with the financial goals you set earlier.   

How to perform a financial checkup

Before getting started, it helps to schedule a time for your checkup. Achieve suggests scheduling one before holiday spending starts and again in late April, after you’ve filed your taxes. Here’s how to get the most out of a financial checkup. 

Take stock of where you are

First, you have to know where you stand. Review the basics:

  • Income 
  • Spending 
  • Regular bills 
  • Current debt 
  • Progress toward financial goals 

You might review my spending and find that some of what you buy doesn’t matter to you. Or maybe you’ve let “lifestyle creep” quietly increase the times you go out to eat instead of making meals at home.  

What you want to find out is if you are accidentally sabotaging your goals by spending money on things that aren’t your highest priorities. You could try a free tool that gives you a snapshot of your spending versus your income each month and also helps you take a hard look at your “essential” versus “non-essential” spending. 

Understanding where you’re at and being brutally honest about the situation can help you take a step back and decide where to make changes. 

Review your budget

You may find you’re not in line with my budget. Catching the misalignment can help you get back on track before too much financial damage is done. 

Look at your planned budget and find where your biggest problem areas are. Then you can make a new plan to better reach your goals.

For example, you may discover that spending more than planned on eating out and entertainment means less money to put toward paying down debt. Even $100 a month can make a huge dent in debt over the course of a year, so this seemingly small habit can be a big deal.

You can change your plan to compensate, perhaps eating out during lunch, when it costs less, and making more dinners at home. That could free up funds to put toward your debt reduction goal.

Look ahead

Part of a financial checkup is to consider what might be coming down the line. Some important expenses to plan for might include: 

  • Insurance policy renewals 
  • Holiday events and gifts 
  • Summer vacation 
  • Back-to-school shopping 

You might also have some major life events on the horizon, like getting married, having a baby, or moving. Consider those in your financial checkup and create a special budget to cover each major cost. 

Pro tip: Set up a special account for a specific goal to stay on track and not lose track of those funds.

Make a plan

No matter where you’re at in your personal finance journey, a plan based on your financial checkup can be a good way to take charge of your money. After completing your financial checkup, break down a list of things you can do to work toward your goals. 

For example, you could set aside a few dollars each week year-round in a high-yield savings account designated for spending on gifts. That plan helps to avoid breaking your budget during the holidays or when you attend a birthday party.

Don’t give up if you have a setback. A financial checkup shows you where you are and how far you’ve come while still giving you room to tweak your plan and grow.

This story was produced by Achieve and reviewed and distributed by Stacker.

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