Your annual financial check up

by Glory Enyinnaya

One of the tips for a healthy financial life is to have an annual check-up. Similar to a health check, a financial check-up should be done on an annual basis to make sure your financial portfolio is healthy, trim the fat out of your budget, and make the most of your investments. Keeping an annual financial checklist is a great way to make sure your finances are in order.

Here’s how:  Simply ask the following questions:

  • How much are you worth?
    •  List all your assets and subtract your debt. Be sure to include investment income, interest and dividends.


  • What’s your bottom-line?
    • Once your net worth is calculated, you can figure your debt-to-income ratio. This is your bottom line. Comparing income to outlay will allow you to establish a baseline budget to work from. The lower your debt to income ratio is, the better off you are. If you have a high one, take steps to lower it over the course of the year and re-evaluate again next year to see your progress.


  • What are your financial goals?
    •  Life changes can precipitate goal changes, so it may be time to rethink the direction of your investments and define more realistic goals. Compare last year’s goal projections to actual standings to determine whether your plan is working, identify weak points and decide whether the time is right for a change.


  • Are you insured?
    • Do an insurance checkup. Do you have enough insurance? Are you overinsured? Make sure that your insurance coverage is in line with your income and net worth. You may also want to shop rates and make sure you’re getting good value for your insurance value.


  • Do you have a will?
    • Review your will. It’s an uncomfortable task, but one that will prove invaluable in case of the sudden death of you or your spouse.


  • How are your investments performing?
    • Evaluate your investments. If your investments are not performing as expected, you may want to consider adjusting your portfolio for a more balanced or more aggressive approach. Young people should consider more aggressive stocks, people close to retirement need the security of established, reliable investments. In general, a balanced approach of mixed investments is adviseable.


  • Can you trim some fat?
    • Eliminate monthly services you may no longer need. Take a close look at your phone and cable bills for excess.


  • Do the documentation.
    • Finally, document everything and store a copy of the information in a safe deposit box or other secure location in case of fire or some other disaster.


Checking off everything on your annual financial checklist will ensure that you are meeting your financial goals and have a realistic goal for the future. Life is fraught with unexpected change, and knowing where you stand can help your family cope in times of financial crisis.

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