Financial Health Check-Up: Keeping Your Finances in Top Shape
Just like scheduling regular appointments with your doctor is critical for maintaining strong physical health, taking time to assess your financial health is essential to make sure your finances remain in great shape! At Hickory Point Bank we’re dedicated to helping you thrive financially with tips from our experts on how to make sure you conduct a comprehensive financial health check-up!
Understanding Financial Health
Financial health is about more than just having enough money – it’s about managing your money in a way that enhances your life. It means having financial security and freedom both that you can enjoy now but also that will last well into your future. To determine your financial health, you need to be able to consider factors like your savings rate, debt, and progress on your investments.
Steps to Conduct Your Financial Health Check-Up
- Manage your goals: your financial situation can change frequently. Kids starting to go to school, major purchases, or a change in your income situation can all require you to revisit your original financial goals. You certainly shouldn’t set your goals too low but, you need to be realistic in understanding what you can achieve and when.
- Review your budget regularly: keeping track of your income and expenses is critical. Update your budget on a monthly basis to reflect any changes of your financial situation and make changes as necessary. This will help you ensure that you’re not spending more than you earn, you’re paying down your debt effectively, and you’re investing in alignment with your goals for the future
- Assess your savings: are you saving enough? The golden rule is to save 20% or more of your net income. These savings should first go to an emergency fund, money that could cover your regular living expenses for 3-6 months in case of any emergencies. Once you have built up (or replenished) your emergency fund, your savings can start to go into other savings categories. This could be areas such as cars, college, homes, or even as an addition to your retirement savings.
- Check your credit score. Your credit score is a crucial indicator of your financial health and is the method by which all credit institutions evaluate your financial position. This will affect your ability to borrow money and the terms that you can receive on your loans. Check your score at least once a year and look consistently for ways to improve it, such as paying your bills on time and reducing your debt levels.
- Review your insurance coverage: Proper insurance coverage is critical to protect against unexpected financial shocks. Making sure you have sufficient health, life, auto, and homeowners/renters insurance can make a huge difference in how prepared you are for life’s ups and downs. Make sure you have a trusted insurance advisor you can sit down with to evaluate your coverage. These reviews should be at least annually or whenever you have a major life change such as with marriage, a new child, or when you move.
- Plan for the future: Ensure you’re on track with your retirement planning goals. Consider whether you’re saving enough relative to your regular expenditure and if your investments are appropriately aligned with your time horizon and risk tolerance. In this case, earlier is always better! The more you can save now, the better you’ll be prepared for the future.
- Seek professional advice: many individuals choose to do their financial health checkup with a trusted advisor such as a financial planner or their banker. Having expert advice tailored to your exact financial situation can make or break a financial plan. You can never plan for what you aren’t aware of and that’s where experts can make a big difference.
Maintain Financial Resilience
Just like a regular workout keeps your muscles strong, regularly reviewing and adjusting your financial plan can keep your finances in great shape. These small changes over time can lead to a big difference in the future. Make sure you stay informed on financial current events and continue to educate yourself on financial best practices.
At Hickory Point Bank, we are here to help you perform your regular financial health check-ups and keep your finances robust and resilient. Remember, financial health is one of the key components of a stress-free life. Let our experts guide you in keeping your financial health in peak condition!
