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How to Do A New Year Financial Check Up

The beginning of a new year is traditionally a time for taking stock of our lives and resolving to create healthy new habits.  Why should our financial lives be any different? With the proper assessment and planning, you can take actions now that will change your financial life in the years to come.

As the new year begins, set some time aside to go over this 6-step checklist to ensure that when December 2020 rolls around, you’re more financially stable than you’ve ever been!

1) Know Your Expenses

Possibly the most important aspect of personal finance is knowing where your money is going.  Take a look at your debit and credit card statements for a couple of months. (Because November and December tend to be a shopping season, statements from September/October might be best to examine your normal spending habits towards the end of the year.)

Look at each of the charges in your chosen time frame.  Where did your money go? Did you spend a significant amount on restaurants when you could have just packed a lunch?  Did you make impulse buys that add up? Are you subscribed to video streaming other services you rarely use? What are some easy changes you can make to save money?

2) Recalculate Your Debt

No one enjoys thinking about how much money they owe, but it’s an important part of preparing for a new financial year.  How much is left on your student loans? How much on those credit cards? Which debt would you like to target this year? Which is costing you the most in interest?

3) Review Any Previous Goals

Did you start 2019 with any financial goals? Did you succeed at your goals?  If not, how can you meet your goals for this coming year?  Being honest with ourselves about past successes and failures is necessary to ensuring future achievement.  

4) Revise Your Budget

A budget is the basic starting point for a healthy economic life, and revising it is also key to an end-of-year checkup. There’s no better time than now to start a budget if you don’t have one already.

Were there any major life changes in 2019 that affected your income or expenditures?  New car? New job? New house or apartment? Get a raise? Factor it all in for your upcoming annual budget in 2020.

After tallying up your food, housing, health care, and other bare essentials, how much of your paycheck is left?  How can you best split the remaining balance between saving for the future and enjoying life now?

5) Consider Your Emergency Fund

Now that you know exactly how much your basic expenses are, it’s time to re-examine your emergency fund.  Financial experts generally suggest setting aside enough money to cover expenses for 3-6 months in case of unexpected job loss, serious illness, or another unforeseen event.  

If you don’t have at least 3 months’ worth of expenses saved, open one of our Share Savings Accounts today or make a plan to invest.  

6) Take a Look at Your Retirement Plan

Some employers offer 401K retirement accounts, with a chosen percentage of your paycheck automatically invested. Even more importantly, many employers offer to match your contributions up to a given percentage.  If your employer offers this – take advantage of it! We emphasized this point more than once in 2019, because it’s one of the easiest ways to save for your future.

In addition to 401k matching you may want to look into opening an Individual Retirement Account (IRA) as an added retirement savings plan. Or, if you already have an IRA, consider increasing your contributions this year.