It’s time for a financial wellness check

Start the year by checking the health of your finances.

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It’s time for your annual wellness check; a periodic check of personal finances is essential to remain in control. Are you on target with your savings goals? Are spending and debt at a reasonable level? A yearly financial review will help with your money management goals.

Savings is an integral part of financial wellness. Having adequate savings will contribute to your peace of mind during emergency situations. You should have enough money saved to cover at least three months of expenses.

In addition, decide what goals you want to achieve. Categorize the goals into short-term, mid-term, and long-term. Short-term goals are defined as those goals that can be attained in less than six months. Mid-term goals take between six and 12 months to reach. Long-term-goals will take a year or more. Write each goal, allocate an amount to save, and assign a deadline to reach the goal.

One important financial goal, that should not be postponed, is retirement. A retirement calculator can assist you in determining the amount needed to save for retirement.

To make saving easier, consider having funds automatically deducted from your paycheck or checking account and deposited into other accounts. You can predetermine the amount that will be deducted. Automatic deposits are useful savings tools but be sure to educate yourself about the terms of opening and maintaining saving accounts. Research any fees, penalties and guidelines associated with the accounts.

Do you plan your purchases or buy on impulse? Do you really know how much you are spending on needs and wants?

Make a list of monthly expenses. Include everything from mortgage or rent payments, insurance or tax payments, to groceries and gifts. This list should be all inclusive. If you spend money on a particular item on an annual or semi-monthly basis, then divide the total amount of the item by 12. This will provide a monthly amount for you to add to the list. Next, calculate the amount of money that you take in on a monthly basis. This should include earnings, alimony, child support, cash assistance, food assistance or social security and disability.

Compare your monthly income to your expenses. Are you on the plus side or do changes need to be made? There are steps to take if you do not feel financially healthy in this area.

Find a way to track your spending. Record purchases on your phone, write them down, or collect receipts. Do this for at least two weeks, then total the purchases. Review how you have spent your money. Are there any changes that can be made?

What about the expenses that are automatically being deducted from your checking account. Have you let them continue on auto-pilot, without much thought? It may be time to end these deductions, if the purchased services or items are no longer needed.

Are you paying for services that you may already have? It’s possible if you have purchased extended warranty or credit monitoring services. Check with your credit card company, cell phone carrier, financial institution and insurance company to see what benefits are included with their products.

Think of the misfortune that can happen on a daily basis. Theft, fire, flood and illness are a few. Are you and your family sufficiently insured to prevent a devastating loss from ruining your financial wellness? Now is the time to contact your current insurer to verify that your policy provides the coverage that you need.

 An emergency evacuation is a likelihood that many of us have not seriously considered. Your possessions may be adequately insured but what about your personal documents? Minimally, you will need personal identification, copies of insurance policies, and bank account records. The Federal Emergency Management Agency (FEMA) has documents containing details for emergency preparedness.

Safeguard your smart phones and computers against the risk of viruses. Establish a safety protocol which includes downloading and using the most current version of anti–virus software and software patches or fixes. Don’t click on embedded links in websites or emails. Don’t enter personal information into unsecured websites. Be mindful of sharing your personal information on social media. Con artists can connect these pieces of information and use them to decipher your passwords and involve you in identity theft.

Your personal risk management plan should include a will or trust in case of your death and a “power of attorney” if you are unable to make your own decisions. Consult an attorney for assistance in these matters.

You will need to organize your financial records to protect yourself in case of a tax audit, or dispute with a financial institution, manufacturer, contractor or service provider. Share the location of these documents with the person who will be responsible for your affairs, if the event of your absence.

Financial wellness checks can be done as often as you need but minimally should be done annually. Use the information provided in this article to assist you with this important task.

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