How to Perform an Annual Financial Checkup

A husband and wife look at their financial information during an annual review.

If you care about your health you get a checkup by your doctor once a year. The same idea should be applied to your finances. Evaluating your financial standing annually will help keep your money and assets healthy, and ensure you’re on track with managing your money. Here are some essential steps to take when performing a financial checkup.

Identify Your Goals

Goals are checkpoints that allow you to measure your financial progress. The first step in your financial checkup should be to evaluate your progress toward the goals you set last year. Have you made progress on them in the last year? Did you fall short of achieving them and why? Have your goals changed? You should be making steady progress toward reaching your goals. If you aren’t, you may want to consider making some changes. It’s important to assess the impact of any changed circumstances in your life and your priorities. As your life changes, some goals may become more important than others, or some may need to be eliminated. If something significant has happened in your life, make adjustments based on your current situation.

Revisit Your Budget

A woman working on her computer and phone, adjusting her budget most likely.

Your budget is one of the most important components for managing your finances. If you have a budget, treat it as being flexible to a point. If you need to make some adjustments, don’t be afraid to do so. If you didn’t make a budget last year, create one now. You can build one on paper or use a budget software app which should help you create one, and will link your bank accounts and credit cards. Make sure to review your budget at least once a month to make sure you are sticking to it. You should have a positive balance every 30 days. If your budget is in the red, see what your options are to fix it. Once you’ve created a budget you can stay on track with, you’ll be able to use any surplus money towards your goals, such as savings or debt payoff.

Reevaluate Your Insurance Coverage

As you probably know, reviewing your insurance policies at least once a year is incredibly important. Look over all of them and make sure the coverage you have is appropriate to your current financial circumstances. Your policies may no longer be adequate for your current financial level. When reviewing your policies, check to see if you are your insured amount is still appropriate. For example, there are many milestones that should clue you in on the fact their your life insurance policy may need to be changed.

Evaluate Your Debts

During your annual financial review, be sure to include reviewing your retirement options.

At least once a year you figure out exactly how much you owe and evaluate your progress in paying your debt off. Your total level of debt should be declining each year. If it isn’t, you need to figure out where the cracks are and make a plan to fix them. This is again a place where changing your budget and adjusting your goals comes into play. Do you value paying off debt quickly? Would you prefer a more measured approach focused on saving? Review all your options depending on what you want.

Review Your Retirement Plans

Take a look at your retirement savings at the end of the year to make sure you are on track to receive the money you will need in your golden years. Get creative if you need to. For instance, if you’ve maxed out your 401(k) contributions, you may be surprised to learn that certain life insurance options can help you save more for retirement. If your employer matches contributions, take advantage of that by putting in as much as you can to double that income. Make sure to research other retirement options that can help build your nest egg, too. Talk to a financial professional1 to get help if you need it.

Update Your Final Arrangements 

If you haven’t created a will, you should do that as soon as possible. If you have a will, make sure you revisit it once a year to update it. Relationships and circumstances change often, so it’s important to make sure you have the right plans in place. There are numerous options to consider when it comes to life insurance. Review your options in detail before you make your final decision.

Remember always that any good financial plan isn’t a simple, one-time undertaking. Most health plans need to be nourished, check on frequently, and updated whenever plans change. Just like your own health, it’s important to take these steps to make sure your goals can be reached. 


1. The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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