What’s a financial self-assessment? It’s a check of your financial health.
Why should I assess my finances? If you’ve ever started an exercise or diet regimen, you’ve probably hopped on the scale to monitor progress. Finances are similar. Regular check-ins ensure you’re reaching goals and saving for retirement.
When should I do it? Experts suggest looking at your finances before a major milestone like applying for a mortgage and around a life change like getting married. In between, make a point to revisit your finances once a year.
What if I’m not on a budget? Even if you think you’re managing your bills in the short-term, you need to be prepared beyond that.
How do I do it? You should assess:
- Retirement savings. Check your contributions. At minimum, take full advantage of your company’s 401(k) match, if it has one.
- Debt. Tally your debts. Tackle the ones with high and/or variable rates first.
- Income. Calculate your take-home pay. Put 50% to necessities, 30% to wants and 20% to savings/debt repayment.
- Emergency fund. Save up three to six months’ worth of expenses in case of a layoff or emergency.
- Credit score. Check your score. The healthier yours is, the more likely you are to get approved for credit.
- Insurance. See if you have minimum coverage (for important assets like your home and car) to protect against loss.
What next? Take our financial health quiz to pinpoint where you should focus first to start feeling confident about your finances.