Your Annual Financial Checkup: The Ideal Time Is Now

Annual checkups are just part of life. You take your car to the mechanic, get your furnace inspected, and visit your doctor to ensure you’re in good health. It should be the same with your finances.

It’s easy to put your financial plans on autopilot, taking a “set it and forget it” attitude. But your financial picture changes all the time as your goals, needs and spending patterns change. Evaluating the status of your savings and investment accounts and addressing a few “financial fundamentals” can give you a clearer understanding of where you stand financially. More important, you can make informed decisions now about any changes that you’ll need to help you stay on track toward your goals.

The end of the year or the start of the new year is an ideal time for a financial checkup. Here’s how to do it.

Look at income and spending levels

You’ve no doubt heard that making a budget is a critical first step to getting your finances under control. If you haven’t made a family budget, or it’s just been a while since you updated it, your annual financial checkup is a great time to create one. Be honest about your income and expenses, and be ready to target areas to cut back if you’re not meeting your savings goals. You can also use online tools to help keep you on track by looking at how much you’re spending in each of your budget categories.

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Check retirement savings and contributions

It can be tough to know whether you’re saving enough for retirement, so take some time now to check in on your account balances and your contribution rate. Many experts recommend saving 15 percent of your gross salary for retirement, but your number could vary depending on your current progress or your other savings. Evaluate your accounts and contributions now to help avoid any surprises later.

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Evaluate your debts

Debts aren’t automatically bad — think mortgage payments or student loans — but they can be a serious drag on your finances if you’re not taking steps to pay them down. Paying just a little bit more per month on your debts can save you a lot of money on interest in the long run.

Don’t forget to look at your credit card statements. According to, in 2019 the average American household had a credit card balance of $8,602. Balances on credit cards carry high interest rates, so paying them off can help save you money as well as reduce your overall debt load.

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Check your credit score and report

Your credit score influences how much you’ll pay for other loans, including mortgages or business loans. The score, which ranges from 300 to 850, represents your creditworthiness, or how much of a risk it is you won’t repay a loan. If you pay all of your bills and other payments on time, your score can improve and may get you lower interest rates on loans and credit cards.

Your credit report also shows any other outstanding debts or accounts in your name. Check it carefully every year, as it’s a great first step to detect any potential instances of identity fraud.

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Reevaluate your goals

Start with the big picture: How much do you want to save for retirement? Are you working to pay off your mortgage? Do you need to adjust your contributions or savings to hit those goals on time? Also look at near-term plans. Do you need to save money for home or vehicle maintenance, or for a big vacation? The earlier you start adjusting your budget, the easier it can be to hit those savings goals.

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Check your emergency fund

An emergency fund is money set aside for unexpected expenses: an emergency room visit, car repair, or other small emergency. And most people don’t have much set aside — a 2019 survey from Bankrate found that only 40 percent of Americans had $1,000 in savings on hand for such an emergency. If you don’t have an emergency fund set aside, take time now to create a plan to build one. It can help give you the confidence that you’ll be able to handle unexpected bills.

Meet with your financial advisor

A do-it-yourself checkup is an excellent first step to getting your finances under control. For more in-depth, bigger-picture planning, consider meeting with your financial advisor. He or she can guide you through more steps to take to shore up your finances now and prepare for your future savings goals.

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Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.