Is it Time for Your Annual Finance Check-up?

6/27/2012, 1:29 p.m.

Your financial health should be assessed the same way your physical health is: annually. Keeping your finger on the pulse of your financial well-being allows you to reach the financial goals you have set, and can also provide opportunities for you to save even more money.

An annual financial review is basically a way to ensure that your finances stay on track. The elements covered below are helpful considerations for an annual financial review; however, it is also best to consult with a financial advisor who can assess your particular situation and needs, and guide you appropriately.

Assess and Revise Progress Toward Financial Goals

Have you met any of the goals you set for yourself last year? Have you had a life change that requires your goals to be revised and changed to better suit your new circumstances?

Update Changes to Your Personal Financial Situation

Increases as well as decreases in income and expenditures need to be updated. Are you anticipating a life change that will require a new set of goals, or a new budget? Buying a home, welcoming a new baby, or making a major purchase like a car all could affect various aspects of your finances.

Evaluate Your Insurance Coverage

Review the coverage you have for homeowner's or renters, auto, life, health, and long-term disability insurance. Does the coverage you currently have allow your family and loved ones the comfort and protection they would need should a situation require it? Is it possible that you are paying for more protection than you need?

Expect the Unexpected

Read over your will, or, if you haven't created one, do so now. Make any changes necessary to reflect your wishes, or include new members of your family.

Consider Your Retirement Plan and Investments

Are you on track to contribute the maximum to your 401(k), if available? If not, have you set up an IRA on your own, or considered other options to help you save for retirement? Have you calculated the return on your mutual funds, stocks, or bonds, and are you satisfied with their performance?

Aim to Minimize Taxes

Have you updated your withholding allowances to make sure you are not overpaying the government? Meeting with a financial advisor to discuss ways to maximize your deductions is a means to reduce your tax burden.

Review Your Debt

Create a plan to pay down or eliminate all of your debt. Should you consider refinancing a mortgage? Have you reviewed your annual credit reports?

Considering these elements of an annual financial review will help you keep tabs on your financial well-being. For additional support, consider accessing a financial advisor who can work one-on-one with you to analyze the different aspects of your finances and assist in creating the best financial plan for your entire family.

Questions? Email me at wesley@thewandwgroup.com and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.