Here's why a financial checkup matters and when to get started

Anytime of year is a great time for a financial checkup. I like to clean up around the house and around my money every autumn and every spring. Your finances might need freshening up, too. I like to freshen up my personal finances with a financial checkup.

A financial checkup can tell you whether you’re still on track with the financial goals you set earlier. For me, it’s also a good time to tweak my approach if needed.

How to perform a financial checkup

Before getting started, I find it helps to schedule a time for my checkup. I like to do it before holiday spending starts and again in late April, after I’ve filed my taxes. You can take different steps to get started, but here’s how I get the most out of a financial checkup.

Take stock of where you are

First, you have to know where you stand. I review the basics:

• Income

• Spending

• Regular bills

• Current debt

• Progress toward financial goals

For example, I might review my spending and find that some of what I buy doesn’t matter to me. Or maybe I’ve let “lifestyle creep” quietly increase the times I go out to eat instead of making meals at home. 

What you want to find out is if you are accidentally sabotaging your goals by spending money on things that aren’t your highest priorities. You could try the Achieve MoLO app—which gives you a snapshot of your spending versus your income each month and also helps you take a hard look at your “essential” versus “non-essential” spending. 

Understanding where I’m at and being brutally honest about the situation helps me take a step back and decide where to make changes. 

Review your budget

Often, when I do a financial checkup, I find that I’m not in line with my budget. Catching the misalignment can help me get back on track before too much financial damage is done.

I like to look at my planned budget and find where my biggest problem areas are. Then I can make a new plan to better reach my goals.

For example, I discovered that spending more than planned on eating out and entertainment meant I had less money to put toward paying down my debt. Even $100 a month can make a huge dent in debt over the course of a year, so this seemingly small habit can be a big deal.

I changed my plan to compensate. I created a new plan to eat out during lunch, when it costs less, and to make more dinners at home. That freed up funds to put toward my debt reduction goal.

Look ahead

Part of a financial checkup is to consider what might be coming down the line. Some important expenses to plan for might include:

• Insurance policy renewals

• Holiday events and gifts

• Summer vacation

• Back-to-school shopping

You might also have some major life events on the horizon, like getting married, having a baby, or moving. When I was getting ready to move, I knew I needed to consider that in my financial checkup and create a special budget to cover that major cost.

Pro tip: Set up a special account for a specific goal to stay on track and not lose track of those funds.

Make a plan

No matter where you’re at in your personal finance journey, a plan based on your financial checkup can be a good way to take charge of your money. After completing your financial checkup, break down a list of things you can do to work toward your goals. 

For example, after my checkup, I decided to eat out fewer times a week and put more money toward paying down debt. Another choice I made was to set aside a few dollars each week year-round in a high-yield savings account designated for spending on gifts. That plan helps me avoid breaking my budget during the holidays or when I attend a birthday party.

Don’t give up if you have a setback. We all do. A financial checkup shows you where you are and how far you’ve come while still giving you room to tweak your plan and grow.