04 Apr Financial Spring Cleaning 2016: How to Do an Annual Financial Checkup
Spring time is finally here, which means the flowers are blooming, the weather is warming up, and the annual ritual of spring cleaning has commenced. Besides sweeping away all that winter dust or cleaning out your wardrobe, it is also necessary to initiate a financial spring cleaning in order to stay on top of your finances. Even if this takes a couple of hours once or twice a year, implementing these good habits during these regular checkups will enable you to keep track of your money.
Here are a couple of tips that will assist you with how to do an annual financial checkup.
1. Reexamine your budget
It has been a couple of months since the New Year, so it’s essential to reevaluate the budget you set in the beginning of January, verifying that your budget correlates with your current earnings and expenses. Maybe you moved to a new apartment, gone on a big family vacation, or received a raise at work; therefore, you must make sure that your budget presents as both your short- and long-term spending goals.
2. Review and audit your accounts
Did you sign up for any accounts such as subscriptions, free trials, or services in January? If so, it is feasible to straighten up these accounts instead of letting them sit dormantly. This will allow you to detect where you can cancel or continue your subscriptions that you possibly forgot about, lessening the additional costs.
3. Assess your debts
Does a large portion of your income end up covering those interest payments on your credit cards? If so, it’s time to examine your debt to income ratio. Because you want that credit card debt to diminish, you need to investigate where those holes are coming from and try to fix them.
Another great idea is to take a look at your credit score by receiving free copies of your own personal credit report online.
4. Decrease your income taxes
When optimizing your taxes, it’s important to take full advantage of your tax deductions and credits for future payments, including medical care, education savings, and retirement. If you have received a large tax return this year, you may want to diminish your withholding so that the government does not obtain an interest free loan. On the other hand, it is feasible to uplift your withholding if you owe money.
5. Analyze your retirement plans
It is always necessary to revisit your retirement funds in order to see if your financial health is in good shape. A beneficial way to stay on top of your funds is to take full advantage of your employer’s 401(k) plan, or other retirement plan that they offer. If your employer does not offer any plan, it’s a good idea to consider setting up your own IRA. Concentrating your efforts on your retirement plan will enable you to be in tip-top shape for the future.
No matter what the time of the year, it is always ideal to take the time to review your finances. The ongoing process of doing an annual financial checkup will permit you to stay on top of all these elements, leaving you in sturdy shape for you and your family’s financial sake.