Evaluating your finances annually is a prudent practice that helps you monitor your expenditure and identify what you can do differently. Financial self-reflection is key to understanding your fiscal strengths and weaknesses, which helps manage your finances and achieve your new goals.
Unfortunately, that’s not the case for many people. However, this financial checklist should get you started in assuming control of your financial life.
Budget and Have a Plan
The COVID-19 pandemic affected many aspects of daily life, including finances; it may have taken a toll on your wallet and left your many other financial goals unaccomplished. However, things are already beginning to look up, as vaccines are here, airports have reopened, and lockdowns are easing up. Although there’s still a long way to go, life is gradually returning to normal. Therefore, it’s essential to create a financial plan that aligns your income and expenses while still offering you enough to save and invest. You can do this by writing them down, using a spreadsheet, or utilizing the many financial or budgeting apps available for your smart devices.
Simplify Your Finances
Efficiently managing your finances when you have many retirement and bank accounts, HSAs, and financial apps can be quite difficult. If that’s the case for you, now is a good time to streamline all processes you use in managing your finances. You can get started by putting together a list of all your financials and other resources to determine those you really need. Consolidate those that are essential and eliminate those you barely used in 2020. While at it, streamline your financial management process and ease the stress that comes with dealing with money.
Audit and Protect Your Investment
To guard against being caught unawares in the face of life’s risks, you have to plan and put measures in place. This principle also applies to dealing with your finances. You may want to find if your investment portfolios correlate with your risk tolerance, how much you’re spending on venture expenses, and whether it’s diversified. Finding answers to these should help you examine your investment before and at the end of each year. You may have to rebalance your portfolios at least twice a year and monitor your trading fees to avoid overtrading or market chasing.
If you engage a professional advisor or planner, it’s vital to periodically assess whether you’re getting value for your resources spent in hiring. It’s also beneficial to engage experts such as Anchor Law Firm to help you with your finances’ legal support services.
Review Your Insurance
Reviewing your insurance coverages is key to guaranteeing protection for your valuable assets. Is it your home, car, health, or life insurance? When it’s time to renew your policies, you should consider reviewing your policy and ascertain whether you’re not being overcharged. If you have other dependents and don’t have any life insurance coverage, include it in your financial checklist this year. However, ensure to research and explore the various policies available to save yourself some money. Fortunately, there are several online resources to compare policies and pick one that suits your financial goals.