7 Reasons to have a Financial Check-Up Every Year

Just like our yearly physical check-up with a personal physician, it’s a good idea to get a yearly financial check-up too, not only to know where you stand but also to adapt, adjust, and modify based on the following life-changing events.

A financial check-up basically means a review of essentials, such as your credit situation, emergency funds, retirement savings and life insurance, all of which your financial advisor can walk you through.

1. Started a new job
When you start a job, imagine three buckets to put your money in. Bucket #1 is for long-term savings — about 10 to 15 percent of your income. Bucket #2 is for big expenditures in the short-term, such as furniture, medical expenses, and travel. Lastly, Bucket #3 is for monthly commitments and bills.

2. Bought/planning to purchase a new home
Buying a new home is the biggest expense of your life. Getting a financial check-up first will give you a clear idea of what you can afford, how much to put down as a down payment, and how to manage your mortgage so nothing sneaks up on you later on.

3. Got married/planning to start a family
Getting married changes your financial responsibilities significantly. You are now in a committed relationship with another person not only personally, but financially. Both parties’ financial situations and expectations need to be sorted out and defined at the earliest opportunity.

Adding another member to your family or having a baby certainly adds to your expenses as well as future commitments. It’s an excellent time to balance your finances.

4. Paying for kids’ education
Paying for your kids’ education could become a setback and a burden if you do not start planning ahead. School and college expenses will be one of the largest financial commitments for parents. Tuition is constantly increasing and the outlook for financial aid and loans is becoming less clear than it used to be. Save yourself unwanted surprises and headaches – Learn about the traditional and non-traditional ways to save for college.

5. Got separated/divorced/ Lost a loved one in your immediate family
In the event of unforeseen circumstances such as a divorce/separation, your financial situation will be drastically affected. You’re looking at attorney and court fees – which often falls on the higher-earning spouse to cover – as well as dividing up assets and savings. The whole process is time consuming, which increases the financial burden on all earning member/s.

Losing a loved one in the family could be devastating financially. That’s not what anyone wants to think about during a period of mourning, but unplanned expenses, settlement fees, and estate taxes are all realities that can chip away at your earnings and savings. Have the conversation now, and make sure your loved ones are taken care of. A financial advisor and CPA will the make the process less painful.

6. Planning to purchase or sell a business/received an Inheritance
This might involve large transactions either coming into the economy or going out of your current savings. This event will involve legal and tax implications that will need planning to optimize current and future tax obligations.

7. Retirement on the horizon
Planning for retirement should begin as soon as a person starts earning. You might have heard this before, but do not wait until the last minute! The golden rule is that your money will have more time for growth if you start early. If you have crossed 40 years of age and still haven’t started saving for retirement, it is LATE, so you need to double up the efforts!

We all know that time doesn’t wait for anyone. Life just zooms past and many times we don’t get to stop, pause, think, and plan. But it is a good idea to do just that every now and then.

About the Author

Vibha is an experienced banker, educator, and a community service volunteer. She is passionate about helping people secure their retirement and helps plan for effective college financial planning funding for parents for their kids’ education. She loves to hike and read during her free time. Send her an email or add her on LinkedIn for more info!

Vibha Aravind
CA Lic. # 0I06035
Strategic Wealth Coach


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