Fall Financial Reset: Conduct a Financial Health Check-Up

When it comes to personal finance, it’s easy to get caught up in day-to-day spending and lose track of the bigger picture. Regular financial check-ups are essential for maintaining long-term stability and achieving your goals. Whether you’re planning for retirement, preparing for unexpected medical expenses, or simply trying to stay on top of your budget, here are practical ways to give your finances a thorough check-up.

1. Review Your Budget and Cash Flow

A strong financial foundation starts with a clear understanding of your income and expenses. Regularly reviewing your budget ensures that your spending aligns with your financial goals. To get started:

• Track your income and categorize your spending (housing, utilities, food, entertainment, etc.).
• Identify areas where you might be overspending or could cut back.
• Consider using a budgeting app to simplify tracking and adjust as needed.

A well-maintained budget helps you live within your means, save more, and prepare for larger financial goals like retirement or unexpected emergencies.

2. Assess Your Debt Situation

Debt management is crucial to financial health. Excessive debt can prevent you from saving adequately for the future and may limit your ability to invest in your goals. To evaluate your current debt situation:

• List all outstanding debts, including credit cards, student loans, mortgages, and car loans.
• Review the interest rates for each debt and prioritize paying off high-interest debt first.
• Explore consolidation or refinancing options if they can reduce your interest burden.

A debt reduction strategy, like the snowball or avalanche method, can provide structure and motivation to tackle what you owe.

3. Evaluate Retirement Accounts

Retirement planning is a vital part of any financial health check-up. It’s essential to regularly review your retirement savings:

• Maximize employer contributions: If your workplace offers a 401(k) or similar retirement plan with employer matching, contribute enough to receive the full match—it’s essentially free money.
• Increase contributions over time: Aim to increase your retirement contributions each year, even if it’s by a small amount. A good target is contributing 15% of your income.
• Check asset allocation: As you get older, your investment risk tolerance may decrease. Ensure your retirement portfolio is properly diversified and aligned with your risk preferences and age. Consider rebalancing if necessary.

Utilizing tools like retirement calculators can help you gauge whether you’re on track to reach your retirement goals or if adjustments are needed.

4. Maximize Health Savings Accounts (HSAs)

For those with high-deductible health plans (HDHPs), Health Savings Accounts (HSAs) are a powerful way to save for both medical expenses and retirement. HSAs offer unique triple tax benefits—contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. To optimize your HSA:

• Contribute the maximum allowed annually (in 2024, that’s $4,150 for individuals and $8,300 for families).
• Treat your HSA as a long-term investment tool by leaving the funds untouched for medical expenses today and using them in retirement.
• Choose investments in your HSA that can grow over time, like your retirement accounts.

HSAs can help you manage healthcare costs in retirement, especially as medical expenses rise with age.

5. Check Your Credit Score and Report

Your credit score plays a major role in your ability to borrow money, qualify for loans, and get favorable interest rates. A regular review of your credit score and report ensures that everything is accurate and that there are no fraudulent activities. To maintain healthy credit:

• Request a free annual credit report from each of the major credit bureaus (Equifax, Experian, TransUnion).
• Dispute any errors or inaccuracies you find.
• Keep your credit utilization rate low (ideally below 30% of your available credit).
• Make sure to pay all bills on time to protect and improve your credit score.

Monitoring your credit can also alert you to identity theft and fraud, helping you act early if needed.

6. Reevaluate Insurance Coverage

A critical part of financial well-being is ensuring that you and your family are properly protected from unforeseen events. This means looking at your insurance policies:

• Health insurance: Are you on the best plan for your medical needs? Consider premiums, deductibles, and coverage limits.
• Life insurance: If you have dependents, ensure you have adequate life insurance coverage to protect your loved ones.
• Homeowners/renters insurance: Regularly review your policy to ensure it covers any new valuables or changes in your home.
• Disability insurance: If you rely on your income to support yourself or your family, having disability insurance can provide peace of mind in case of injury or illness.

Regularly updating your insurance policies ensures that you’re adequately protected without overpaying for unnecessary coverage.

Practical Tip: Make sure you designate beneficiaries!

7. Plan for Future Goals

A financial health check-up should always include a forward-looking approach. This means setting short-term and long-term goals and creating action plans to achieve them. Some things to consider:

• Are you saving enough for upcoming life events, such as buying a home, starting a family, or going on a vacation?
• Do you have an emergency fund that can cover at least 3-6 months of living expenses?
• Are you on track for major goals like retirement, paying off debt, or funding a child’s education?

Having clear, actionable financial goals can help you stay motivated and make informed decisions about where to allocate your money.

A financial health check-up is not a one-time task but an ongoing process. Take the time to assess your financial picture regularly and adjust as needed—it’s a small investment in your future success.