Time for Your Financial Checkup?
You can’t buy a crystal ball to predict your future. All you can do is be prepared and take good care of yourself. Doctors recommend an annual physical and the dentist wants to see you at least twice a year. Even our cars need oil changes and maintenance to make sure they are working properly. So how would you fare with a financial checkup?
The first question to ask is if you are financially prepared for an emergency. Experts recommend you keep a cash reserve fund to cover your daily living expenses for at least three months, though preferably six. This is intended to cover an emergency situation such as the loss of your job or spouse, a house fire, or a hospitalization or debilitating illness.
With life expectancy on the rise in the U.S., your financial checkup should determine if you have enough money to see you through. The best way to approach this is to have your financial advisor prepare an income/retirement analysis. They will need an accurate monthly budget with your income and expenses, along with a summary of your assets and liabilities.
Once they run the numbers, they will be able to project how much money you need to maintain your current lifestyle. If there is a shortfall, you will want to make adjustments.
Understanding your situation can help you feel more comfortable giving gifts, contributing to charities, taking vacations, spending money on entertainment, shopping, and eating out more or less!
Staying on top of your bills, checking account, credit cards and investment accounts will help prevent you from becoming a victim of fraud or identity theft. Checking your credit score and credit report on a regular basis is another way to stay on top of your financial identity and is an integral part of a regular financial checkup.
Asking your advisors about their fees and understanding how you are being charged for their services is your right and should be made clear to you.
The more you understand, plan and review your financial situation, the better prepared you will be to handle any and all of life’s challenges.