Practice tracking your spending for a month, but don’t just include dollar amounts and what you bought. Jot down notes on why you made the purchase and how it made you feel.
Kakeibo is a budgeting method that incorporates mindfulness about spending.
11 Steps to Complete Your Own Financial Checkup
If you’re overspending on take-out during the work week because you’re too tired to cook, that could be a sign to start meal prepping. If you love how you feel after taking a drop-in yoga class and realize you want to do that more frequently, you could save money with a monthly pass rather than paying per session.
1. Update Your Budget
Here’s how to examine and improve your financial health. Source: thepennyhoarder.com
2. Track Your Spending
Your credit score is important when it comes to things like taking out a loan or renting an apartment. A low credit score can mean getting denied — or paying significantly more in interest or for a security deposit.
During your financial checkup, review how much money you have set aside for emergencies. Many experts recommend having between three to six months worth of expenses saved, but you could shoot for having a 12-month emergency fund if you desire a bigger financial cushion.
Nicole Dow is a senior writer at The Penny Hoarder.
Increase or decrease spending limits in your various budget categories so they fit your current priorities and desires. Test out a different budgeting method or combine a couple to create your own money management plan, like this woman did.
3. Reduce Your Fixed Expenses
To maintain good financial health, it’s smart to have a contingency plan for if something goes wrong.
Review your credit reports to check for any inaccuracies. If something is on your report in error, you can dispute it with the credit bureau and potentially raise your credit score.
4. Add to Your Emergency Fund
You can get a free copy of your credit report from all three credit reporting bureaus — Experian, Equifax and Transunion — once a year at www.annualcreditreport.com.
You go to the doctor for your annual physical to make sure your body’s healthy. But when’s the last time you had a checkup for your financial health?
In addition to making sure your resume is in stellar condition, you’ll want to nail down how to write a winning cover letter.
5. Check Your Progress on Other Savings Goals
Even though retirement may seem like a long way away, the best time to start saving for it is now. Retirement accounts grow the more time you give them to benefit from compound interest.
Disability insurance provides income when you’re sick or injured and can’t work. Home, renters and auto insurance pay to repair or replace your property after an accident or disaster. Life insurance takes care of your family in the event of your death.
6. Assess Your Retirement Contributions
Ready to stop worrying about money?
If you want the gratification of clearing an entire credit card balance, the snowball method of debt repayment focuses on the smallest balances first. If you want to attack the debt with the monster-sized interest rate, try the avalanche method.
There are different ways to tackle paying off debt. Use this financial checkup to determine if your current repayment plan is working for you.
7. Evaluate Your Debt Repayment Plan
Your fixed costs — the unchanging amount you pay for things like rent, cell phone and auto insurance — may seem inflexible, but they don’t have to be. Research competitors’ rates to negotiate your bills with your current provider or switch to a new one.
If you have less than three to six months, make a plan to add to your savings in the year ahead.
8. Improve Your Credit Score
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Do you often wonder where all your money goes? If so, logging every dollar you spend will give you some insight.
Are you meeting your employer’s 401(k) match? Did you up your retirement contributions the last time you got a raise? Could you free up a little more each paycheck to divert to your retirement account, even if it’s just an extra 25 bucks?
9. Pull Your Credit Report
An unexpected crisis can pop up at any time. Having a robust emergency fund makes those situations a little less stressful.
Even if you’ve automated your savings for, say, an upcoming vacation or a home down payment, your goals aren’t something to just set and forget. Use this financial checkup time to see how close — or far away — you are from meeting those goals.
When it comes to housing costs, getting a roommate can significantly reduce that fixed expense. Just make sure to screen all potential roommates so you don’t end up with a dud. Or if you’re cool with the nontraditional, these alternative housing options can help you save money.
10. Update Your Resume
Conversely, the higher your score, the less money you’ll have to pay.
Budgets should not be static. Jump in and adjust yours if it’s not working for you.
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11. Protect Your Assets
It’s important to know how well you’re managing your money and where you can make changes for the better. Without a regular financial checkup, you might continue to repeat poor money moves, like giving into frivolous impulse buys or only paying the minimum on your credit cards.
If you plan on applying for a new job, it’s also useful to know how to negotiate your salary so you get the pay you deserve.
Every little bit helps.
You can raise your credit score by paying down the balance of your existing loans and credit cards, not incurring additional debt, requesting limit increases on your credit cards and paying your bills on time. <!–
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Review your various policies to make sure you have the coverage you need.