The Essential Financial Wellness Checklist: How Are You Doing?

February 13, 2023 |
Article | 5 min
| Personal Insights

Building and sticking to a robust financial wellness checklist is the best way to assess your situation. Are you looking to review where you are with your finances? Wary of your financial fitness and how you stack up? Use this list to check your financial health today.

The start of a new year is the perfect time to reflect on your financial situation. Whether you’re saving for a big purchase, planning for retirement, or reassessing your budget, a financial wellness checklist can show you where you stand. According to a recent survey by the National Financial Educators Council (NFEC), lack of financial awareness and personal knowledge cost Americans more than $436 billion annually. It is no wonder that 88% of Americans acknowledge room for improvement when it comes to their financial wellness according to a recent survey of consumer sentiment.

Are you looking to review where you are with your finances right now? Wary of your financial fitness and how you stack up? Use this list to check your financial wellness.

What Is Your Budget Status?

Healthy finances start with a budget. Put budgeting at the top of your financial wellness checklist and keep it there. Evaluating your budget is a quick and easy way to examine how you spent and saved money last year. You can then take that data and determine critical areas for improvement. Is there waste you can avoid? Can you save more? Pay down debt? Add to your children’s college funds?

In addition, several major life events require you to review your budget status, such as:

  • Receiving a Pay Raise. Increased compensation can go a long way, so adjust your budget accordingly. For instance, you could put the extra money directly into savings or add it to debt repayments.
  • Loss of Work. On the other hand, you may receive a pay cut or lose your job. If that occurs, your budget must account for a sudden stop in income.
  • Buying a New Home. Purchasing a new home involves more expenses than your down payment and mortgage. Build your budget to consider homeowner association (HOA) fees, taxes, insurance, utility bills, general maintenance, and other hidden costs of ownership

How is Your Credit Score?

Your credit score is a rating of how likely you are to pay back a loan. Think of this number like a score on a test: the higher the number, the better it is. Low scores make obtaining loans for large purchases difficult. As part of your financial wellness checklist, check your credit score frequently. It’s best to review it as often as possible.

A client exchanges a handshake with an advisor

Mobile banking apps put your credit score at your fingertips. You can also enable email notifications from the three major bureaus (Experian, Equifax, and TransUnion) to alert you of any fluctuations.

If you’re actively trying to improve your credit score, regular checks will show how your actions are paying off. Since your credit score is based on the information in your credit report, you can quickly determine which areas you need to focus on, such as reducing high-interest debt or paying bills on time. Also, if your credit report shows incorrect or inaccurate information, these regular reviews allow you to correct your report and possibly improve your score.

How are you invested?

Anyone with money tied up in real estate, business, or the stock market knows how often those investments’ values can change. Regularly evaluating where your current investments stand is crucial to effective budgeting.

When reviewing your financial wellness checklist, revisit your investments and ensure they align with any new goals. For instance, if you’re going through a major life event, adjust them to reflect your new risk tolerance. It is safe to say that those who have accumulated more or have larger incomes are able to assume greater risks when it comes to their investments. A regular review of your investments allows adjustments to be made should one be subject to a job loss or reduction in income to reduce risk to secure your savings.

A person taking some time to check on their finances

Match your investments to a certain time frame or goal. For example, long-term investments include saving for retirement or a child's education, while short-term investments may include saving for a car, vacation home, or travel.

Debts, Insurance, and Retirement: How Are You Holding Up?

If you carry a lot of high-interest credit card debt, make paying down those cards your top priority. With interest rates as high as they’ve ever been in recent history, the amount you’re paying to carry debt is likely cutting into your investment gains. For example, paying off a credit card charging 16% interest means that your future earnings will see a significant return to you in less interest owed and an improved budget further increasing your financial wellness. Paying down debt is also a great way to boost your credit score. It lowers your debt utilization—how much available credit you’re using-which is a significant calculation of your credit score.

Meeting between financial advisor and client

Some people overlook insurance when going through their financial wellness checklist. Don’t think of your insurance policy as an answer to the worst-case scenario. A robust insurance plan prevents an accident or unexpected event from derailing your financial plan. Consider it a safety net under your budget. Make sure to factor insurance premiums into your yearly budget review.

The new year is also perfect for evaluating your retirement plan. Did you meet your savings goals last year? What adjustments are needed to meet your goals?

Creating a financial wellness plan is not a one-time event. Part of the plan is to anticipate unexpected changes and address them appropriately. Meet with a trusted financial partner at least once a year to help keep pace.

How Can You Adjust Your Finances?

Your financial wellness checklist should be a guide on where to build and maintain your budget, meet your goals, and help you make needed adjustments along the way.

Person reviewing their expense report for the month

Here are a few key ways to modify your finances:

Track and Manage Your Cash Flow

Analyze your spending to understand and manage your cash flow. Consider how much you spend on utilities, groceries, and entertainment. Establish a monthly budget to save money and cut back on non-essential expenses.

Keep Inflation in Mind

While experts predict inflation levels to fall, it won’t happen overnight. High inflation decreases your money’s value, so consider the rising costs of goods year-over-year. For example, a $400,000 house today might be less affordable in the future if interest rates on mortgages continue to rise. If buying a new home is among your top priorities, make sure your savings strategies account for inflation.

Stay on Top of Equated Monthly Installments (EMIs)

Equated monthly installments (EMIs) are what you owe your lenders each month. The most common EMIs are mortgages, auto loans, and student loans. Aim to have all these loans paid off by the time you retire.

Carrying debt—especially student debt—into retirement can eat away at your savings and social security payments. Work these payments into your monthly budget and determine where you can cut spending to meet your obligations.

Find a Trusted Partner to Help With Your Financial Wellness Checklist

Building and sticking to a robust financial wellness checklist is the best way to assess your situation in the new year. With proper budgeting, investing, and retirement saving strategies, you can easily maintain your current quality of life—perhaps even improve it.

Understanding your financial situation is made easier with the help of a trusted financial partner like First Bank & Trust, a division of HTLF Bank. They’ll keep you up to date with the latest trends and help you meet your financial goals.

Get in touch with First Bank & Trust, a division of HTLF Bank today to speak with an expert with deep industry insight. Together, you can check the boxes on your financial wellness checklist and position yourself for a profitable year.

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