Benefits of a Financial Checkup

Financial checkups are crucial for setting and meeting our financial goals. Unfortunately, it’s one task forgotten by many year after year. While reaching your goals without a checkup is possible, the chances go way up when completing annual financial checkups.

Think of it this way: we all understand that remaining healthy is crucial for a long, healthy life. While diet and exercise help, regular doctor visits keep us updated on how our bodies are doing and what we should do to maintain or improve our health.

Financial checkups work much the same way. By consulting with a professional, we can maintain a stable financial status and provide for our future financial needs. We can also learn how close we are to reaching our goals and what actions we should take to ensure we do.

If you’ve never performed a financial checkup or don’t know how, that’s okay! To help, we’ll outline what a financial checkup is, how to perform one, and how they can help.

What is a Financial Health Check-up?

A financial health checkup is an assessment of your various financial assets and holdings. It reviews your income, expenses, debts, budgets, credit score, and assets to determine where you stand financially and whether you’re on track to meet your financial goals.

By performing an annual financial checkup, you can determine which of your financial habits work best, where you can improve, and whether to reevaluate your long-term goals.

How to Perform a Financial Health Check-up

A financial checkup consists of reviewing all financial holdings and assets. There’s no one way to perform the checkup, but having a plan or checklist can help ensure you’ve covered all your bases. While you can perform a checkup independently, hiring a financial advisor can help ensure a thorough assessment, explain the findings to you, and suggest a course of action for future financial well-being.

When performing a financial health checkup, consider these steps:

Consider major life changes

Financial health can fluctuate with events in your personal life. These can be events that incur a significant financial burden or offer you an unexpected windfall. Alternatively, the changes can offer more subtle changes to your daily budget, income, or expenses.

These should be changes that have occurred since your most recent financial checkup. Consider changes such as:

  • Marriage/divorce
  • Having a baby
  • Major purchases: house/car/etc.
  • Change of job: promotion/demotion/layoff/etc.
  • Retirement
  • Receiving an inheritance
  • Changes to your health

Review income and expenses

Create a detailed list of income and expenses. This can help you understand whether you’re living within your budget.

If you have more money coming in than going out, that’s great! Earning more than you spend is essential for saving money and ensuring financial health.

If you earn less than you spend, you can determine which expenses are essential, which you can do without, or whether to take action to increase your income.

Affordable budgeting software exists to help you maintain and reassess your budget regularly. Alternatively, you can create a budget with free spreadsheet options like Google Sheets.

Assess your debt

Assessing your total debt is essential for understanding your current financial situation. Listing all debts can help you determine how much you owe and create an approximate payback timeline. It would also help to consider the interest rates tied to each debt. This way, you can prioritize which to pay down first or which should be refinanced.

This can also help you craft a more accurate budget that prioritizes those debts against the rest of your spending.

Consider debts such as:

  • Mortgages
  • Personal/student/auto loans
  • Credit card debt
  • Healthcare/medical debt

Review retirement savings

Retirement is probably the most long-term savings goal you have. And, because it affects your income once you’ve stopped receiving a regular paycheck, it’s crucial that you meet your goals. Remember that Social Security benefits only cover a fraction of retirement expenses, so you’ll likely need other sources of income.

Consider how much you’ll need to sustain your lifestyle during retirement. It’s important to review all financial accounts designed to provide retirement savings. This includes savings accounts, investment portfolios, and retirement plans. Assess how much you have saved, your growth rates, and whether you’re on track to meet your goals.

Consider reviewing every retirement plan you have, including:

  • Traditional and Roth 401(k)
  • Traditional and Roth IRA
  • Simple IRA
  • 403(b)

Check your credit report

Your credit score can give you a quick assessment of your current finances. Of course, this depends on how accurate your credit report is! Consider checking your credit report for any inaccuracies that could affect your score. An inaccurate credit report could impact your ability to get a loan, the terms of those loans, and the interest rates offered to you.

The three major credit report agencies are legally bound to give you one free report each year. Many websites are available where you can access these reports, with some allowing you to check them regularly at no charge.

Understanding your credit score and which factors are impacting it can help you prioritize which debts to pay down, whether to refinance a loan, or whether to consolidate.

If you do find any inaccuracies, you can contact the credit bureau to have them corrected.

Assess your insurance

Insurance needs can fluctuate. When assessing your finances, you should ensure your insurance coverage meets your needs. This is important for two reasons: first, it helps protect you against unexpected financial hardships. Second, it helps ensure you can afford all your insurance premiums.

Track all your current assets and whether they are or should be insured. Keep in mind that many assets legally require insurance.


  • Health insurance (Including for yourself and your family)
  • Homeowner’s/Renter’s insurance
  • Auto insurance
  • Disability insurance
  • Long-term care insurance
  • Life insurance

Review estate plans

No matter the size of your estate, it’s important to plan for what happens in a worst-case scenario. Luckily, your financial checkup has given you a complete understanding of your finances and assets! Consider how those assets impact your will and who you might choose to be your executor, trustee, and any beneficiaries.

Consider your taxes

It’s likely that your employer withholds more than enough to cover your income taxes. However, that’s not a given. The IRS offers a free tool to calculate your optimum withholding amounts to ensure you don’t receive an unexpected tax burden at the end of the year.

But it’s just as important to consider any other tax burdens you might have. Consider items such as estate taxes, property taxes, and gift taxes. This can help you save enough throughout the year to ensure you have enough to cover your taxes.

Reassess your goals

Once you fully understand your finances, you can determine whether your goals need amending. Your financial goals may fall short of your needs. Alternatively, you might not be as close to meeting your goals as you’d assumed.

A financial advisor can help you determine more accurate goals and develop a plan for meeting them that you can follow.

Benefits of a Financial Check-up

A deep understanding of your finances offers many benefits. Performing a checkup annually brings those benefits to you every year. This way, you can keep up with your financial situation and make the most of the benefits available.

Some of the most important benefits of a financial checkup include the following:

  • Improved Financial Health: A financial health checkup can help you identify areas of weakness in your finances and take steps to improve them. This can help you achieve financial stability and security.
  • Better Financial Planning: By reviewing your finances, you can set goals for the future and develop a plan to achieve them. This can help you make better financial decisions and avoid financial stress.
  • Improved Credit Score: Checking your credit report and correcting errors can help improve your credit score, leading to lower interest rates on loans and credit cards.
  • Increased Savings: By reviewing your savings and investments, you can identify ways to increase your savings, create an emergency fund, and achieve your financial goals faster.
  • Reduced Financial Stress: Knowing where you stand financially and planning for the future can reduce financial stress and anxiety.
  • Retirement Readiness: A financial health checkup can help you identify areas where you need to save more, what debt could impact your retirement, and whether you can further optimize your contributions to retirement plans.