July 1, 2022

What Is a Financial Check-Up and Why Should You Do One?

Valerie Mellema
Fortune 500 Editorial Contributor

When it comes to things people wish they could avoid, finances usually make the top of the list. However, with proper financial health, you can get a lot more out of your money and your goals surrounding your spending, saving, and investing. Doing a financial checkup regularly and/or after major life events is a way to ensure that you’re on track, see where things might need some work, and confirm that you’ve got all the financial protections that you need in place. 

First, though, you should learn about what a financial checkup entails and how it can help you get a better idea of where your money is going (and whether you need to change that). This will ensure that you don’t miss anything that could be critical to your financial health. Just as though you’d go to a doctor for a physical exam or check-in, you’ll need to find the professionals who can help you check in on your finances and get things in shape. 

What Is a Financial Checkup?

First up, let’s discuss what this review even is—it’s a close-up look at your finances, almost systematic in nature, offering you a complete view of the state of your finances, no matter what state that might be. It will include checking everything from your budget to your debts, investments, retirement contributions, and more. This can be done on your own or by enlisting the assistance of a financial expert that can help you review your current standing and make suggestions for improvements. 

A financial checkup will involve taking inventory of your current financial situation. This includes debts, assets, investment accounts, and other financial elements. If you have savings or retirement accounts, those should be checked, too. Once you know where you stand, setting a budget and short-term financial goals is the next move. 

Setting Goals for the Future

Once you complete a financial checkup, you will be able to use that information to help you set both short- and long-term goals for your personal finances. You’ll need to ask yourself things like:

  • What are my goals? 
  • When do I want to achieve these goals? 
  • What amount of money is involved with each goal?

The more specific you can get, the more accountable you can be when it comes to measuring your success in the future. Goal setting is a part of a financial checkup that allows you to embrace the tools that you have to plan a better financial future for yourself and your family. 

Monitoring is another step in the process that will help you track your goals and your financial plans, allowing you to course-correct or make changes where it’s necessary. 

How Often Should This Be Done?

The next thing people want to know is how often they’ll want to do a financial checkup. The answer depends on how much money you have, how you spend, and how closely you want to monitor your spending. Usually, experts recommend a financial checkup at least once per year, but it may also be prudent to do it more than once a year. You might also want to check in on your finances before you expand your business, for example, or before you take on a new home equity loan. 

Financial health can impact all areas of your life, including your physical and mental health and wellness. That’s why doing regular checkups on your personal financial situation is important. It helps you understand where you’re at, but it also allows you to plan for where you want to go in your personal financial journey. 

The Steps Involved

Although there’s no cut-and-dry checklist for a financial checkup, there are some elements and steps that will be involved for everyone. For example, it’s always a good idea to revisit your personal financial goals whenever you have major life changes. You can also use this time and information to help you set and reset your financial goals and ensure that you are on track. By monitoring your success, you’ll be aware of the next steps even before it’s time to make them. 

You’ll want to come up with a loose budget to begin with, and then assess your debt, earnings, and other factors to tighten it up and get more specific. You’ll also want to take time to check your credit reports, visit your retirement accounts and other savings, and make sure that you’ve got the right insurance and protection for your finances in place. 

The Bottom Line

Being on top of your finances means knowing where you stand and what your next moves will be. A financial checkup is a great way to stay on top of the money and make sure that you know where it’s all going. This should be done once per year, as mentioned, or as often as needed when there are major life events, etc. During this process, you’ll want to evaluate everything and take note of the current state of your finances so that you can make smarter decisions about your next moves and future needs. 

This can help you stay on track and achieve your financial goals. You will need to start making changes as soon as possible, so make sure that you’re ready to implement any changes that you do make. That way, you’ll know that your finances are on the right path, no matter what path that might be. 

For individuals interested in Jupiter Card

Our product will soon be available through a bank or credit union near you. In the meantime, join our 10,000+ person waitlist receive company updates, helpful financial health articles and more.