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How To Do a Yearly Financial Checkup


How To Do a Yearly Financial Checkup

The start of a new year is always a good time to take a look at your financial situation and determine if you’re on track for the goals you have in mind. Gather together any documents that relate to your financial life and sit down for a few hours to review everything—you never know where you could find places to improve and save a little extra change!

Review Recent Life Changes and Upcoming Goals

Before you dig into your financial wellness checkup, think about what your life currently looks like and set some goals for the next 12 months. Perhaps you have some major financial changes on the horizon that you need to factor into your plans, like:

  • Buying a house
  • Starting a business
  • Getting married
  • Welcoming a new child into the family
  • Retirement
  • Paying off debts
  • Sending a child to college or returning to school yourself

All of these are significant life events that can dramatically change your finances, so it’s best to be as prepared as possible ahead of time.

Even if none of the above are in your immediate plans for this year, it’s still a good idea to think about your long-term goals and how you can factor planning for these into your budget now.

Understanding your goals now, regardless of when you hope to achieve them, will help you determine your overall financial health and point you in the right direction for areas that you need to focus on.

Check Your Credit Score

Start your financial checkup with something simple—check your credit score! It only takes a few minutes and you can get a full credit report once a year for free at

Your credit score is an important indicator to lenders of how trustworthy you are, so if you’re planning to buy a home or start a business this year, knowing and improving your credit score is essential. Scores typically range from 300 to 850 and the higher the number, the better your chances of being approved for a loan and having a lower interest rate.

Your loan repayment history, including your credit cards, how much debt you currently have, your credit history, what types of accounts you have…all of this contributes to your overall score. So pull your free report to find out the lay of the land and where you can make adjustments to increase your credit score.

Take Stock of Deposit Accounts

You need to know what you have already to know where you’re headed. That’s why it’s important to make a list of all your existing deposit accounts and find out what money you have right now.

Go through your yearly statements to see where you could possibly make savings. If you’re a business, this is even more important as you likely have several items that you can write off as expenses come tax time.

You could also consider consolidating your accounts if you have multiple checking or savings accounts with different financial institutions. If you have a significant amount in savings, now may be the time to look into higher interest options like money market or certificate of deposit (CD) accounts instead. Read more about choosing the right account.

Review Your Savings Plan

Speaking of savings, this is the ideal time for a financial review of what you currently have and if you’re on track to meet your goals. If you’re planning to buy a home this year, consider whether you have enough saved for a down payment or if you still have some work to do.

Retirement is another big goal when you’re thinking about how to get your finances in order. Are you saving enough or could you be contributing more to your 401(k)? Setting up an IRA this year could help you add more to your overall retirement bucket too. Learn more about IRAs and how to open one.

Look into additional workplace savings options that you could benefit from, like Health Savings Accounts. These can often have tax advantages, along with providing you cash to use for medical expenses throughout the year. And if you still have money leftover once you retire, you can still use anything in your account for healthcare costs tax-free. 

Beyond your long term savings goals, you also need to think about what you have available in the short term.

If you don’t already have an emergency fund, now is the time to start one. And if you do, anything you can add to top this up will be beneficial. There are plenty of numbers thrown around about how much you should keep on-hand for emergencies, but a good estimate is starting with $500, then moving up to 6 months of living expenses. 

Create a Debt Repayment Strategy

These days, it’s more unusual for people to not have any debt than it is to owe money somewhere. Reports from 2022 show that household debt has increased at the fastest pace in 15 years, with credit card balances collectively rising more than 15% from 2021, the biggest annual increase in over two decades. While paying off debt is certainly something you want to focus on, it’s also important to understand the difference between “good debt” and “bad debt.”

Good debt can help you to increase your overall net worth, which is usually expenses like mortgages or home loans, educational costs or business debt. Bad debt is typically money borrowed on a depreciating asset like a car or consumer goods like clothes or furniture. You won’t raise your net worth or generate any income from these purchases, so it’s best to keep this type of debt to a minimum and pay it off quickly.

There are plenty of options for repaying your debt, like the Snowball Method or the Avalanche Method. One alternative is debt consolidation, where you take out a personal loan for a lower interest rate than your credit cards or other loans. You then use this loan to pay off your existing debts so that your future debt repayment is focused on this single loan only.

Review and Revise Your Budget

Taking a hard look at your weekly or monthly budget at the start of the year is an excellent way to help you achieve your financial goals faster. If saving more or paying down debts are your top goals, look at where you can make cuts or adjustments in your budget to free up some additional money to put towards those goals.

If you’ve never made a budget before, now is the time to start. First, make a note of what your typically take-home income is for each month. Then print off your financial statements for the last 12 months and go line-by-line to see what you spent and in what categories. You’ll probably be surprised at what you find!

You’ll want to start listing out your expenses from most to least necessary. Your fixed monthly bills like a mortgage or rent, electricity, phone etc. should all be at the top, followed by any necessities like groceries or transportation (it’s fine to use an average based on last year for these, as they can be changeable month-to-month).

Then it’s time to review items that might be considered as luxuries rather than necessities. Subscriptions like streaming services or gym memberships don’t have to be cut, but it’s vital you know where your money is going each month. If you can eliminate some to save money because they’re not being used often, now is a good time to make that change.

You may also want to consider setting up automated savings via your online banking service. This will help you allocate money in your budget for both your short and long term goals, along with making the process of saving quick and simple.

If you’re not sure where your money should be going, a popular budgeting method is the 60/20/20 rule. This is where 60% of your take-home money should be allocated to living expenses, and 20% each to your savings and personal wants or luxuries. In other words, you’re spending 80% and saving 20% of what you make each month.

Review Insurance Policies

No matter what type of insurance policies you hold, the start of the year is a good time to review these. Make sure that any beneficiary information is up to date and think about whether your life situation has changed enough over the last year for you to need more or less insurance than you currently hold.

Homeowners insurance is essential for anyone with real estate assets and will be a requirement if you’re taking out a mortgage. Life insurance is also something to consider if you don’t currently have a policy. Shop around for better plans before you’re locked into your existing ones for another year. You may be able to get better coverage or save money by going elsewhere.

Get Your Estate in Order

No one wants to think about the end of their life but having a detailed plan in place can save your family from a number of headaches during a difficult time.

If you’ve not yet made a will, add this to your goals for the year. But even if you’ve already made a will before, check that everything is still as you want it to be, that your beneficiaries are accurate and that you’re happy with the executor you’ve named.

Evaluate Your Investment Strategy

Your approach to investment will likely change as you age but taking a look at your portfolio each year is an essential part of any financial checkup. Talk to your financial advisor to see what options are best for you, whether that’s rebalancing a portfolio or considering other investment options.

Review Your Taxes

Finally, review your taxes for the previous year and think about where your current finances could help you for the upcoming tax season. You always want to be sure that you’re making the most of any deductions and finding areas where you can lower your taxable income.

Contributing to a 401(k), HSA, IRA or FSA are all ways that you can lower how much money you’re taxed on. If you took out a HELOC or home equity loan this year for home improvements, you may be able to deduct the interest on this. Mortgage interest and student loan interest are also usually tax deductible. For any energy efficient appliances you purchased, you may also be eligible for tax energy credits.

Speak with your accountant or financial advisor to better understand the tax bracket you’re in. If you usually owe money each year, you may want to save a little each month for this or pay your taxes quarterly, especially if you’re running a business.

Start Your Financial Checkup Today

Taking control over your financial life doesn’t need to feel scary or overwhelming. In fact, knowing exactly what money you have now, what your financial goals are and how you can prepare for those can be an empowering experience.

At Citizens Savings Bank, we’re here to help you reach whatever financial goals you have in mind. From lending to everyday money management, our team will work with you to find the best financial solutions for your situation. Visit us at one of our branches throughout Northeastern Pennsylvania, or contact us online to talk to one of our customer support team members.

Learn More

Citizens Savings Bank has multiple locations throughout Lackawanna, Wayne, and Monroe Counties. For branch locations and hours, visit our website. We also have a Customer Support Team ready to answer any questions you may have. Call us today at 1.800.692.6279 or email [email protected]. Member FDIC.