9 Ways To Tune Up Your Finances
Besides your health and your family, your money is the most important thing in your life. After all, it helps you take care of the first two things. Because of this, you need to keep tabs on your finances on a regular basis. Here are 9 things that you should make sure to do each and every year.
- Pull Your Credit Report
Hopefully, you subscribe to a credit monitoring website and receive regular updates. If you do not, you should, especially since these services can be had free of charge. Whether you get monitoring or not, you should review an actual credit report from every major bureau at least once a year. Take the time to pour over it and look for any mistakes, they do happen. If you paid off a loan, make sure that it is marked paid. Look for addresses that are not yours and accounts that you never opened. A strange account is not necessarily fraud, it could just be a mistake but it needs to be investigated. Challenge any erroneous information that you find with the bureaus. They have online tools to do so. - Update Your Budget
Now is the time to review your budget and make adjustments. Has something in your life changed? Probably something has and you will need to adjust how much money is going towards food, utilities or even insurance. Look at how much is left over and make sure that you are putting enough money into savings. If you are planning on taking a vacation later in the year or have a big expense on the horizon, start putting more money into your short term savings so that you are prepared. It can help you avoid taking out an installment loan to pay for the expenses later, you can get an instant loan quote to see how much that would cost you. Budgeting will allow you to avoid those fees. - Look At Your Debt
This is also a good time to look at your debt. Look at your car loans, credit cards, home loans and more. If you have student loan debt or credit card debt, look at ways to pay down loans fast with techniques like debt snowballing. Also, take a look at the interest rates that you are paying and consider whether they can be improved upon. Is it time to refinance your car or perhaps your mortgage. Carrying debt is not a bad thing in all cases but you should review how much and what types of debt you are carrying once a year. - Check Your Withholding
Did you get a tax refund or bill this year? Now is the time to correct any problems. If you received a refund, you have basically been giving the government a free loan all year. It is nice to get a big check once a year but you could have been earning interest on that money. On the flip side, if you received a big fat bill at the end of the year, you received a nasty surprise. You need to make changes to prevent this expense next year. In either case, adjust your W9 as needed. - Update Your Insurance Needs
Your insurance needs will change from year to year. If you have a family now, for example, you should think about life insurance. If you already have life insurance, are you carrying enough? Don’t stop there though. Audit your homeowners insurance to make sure that you have the right coverages and that your home is valued correctly. Look at your car insurance and make sure that your liability limits are high enough to cover the costs of the high end cars that are on the roads these days. If you are at fault in an accident and your insurance coverage is capped too low, you are on the hook. - Audit Your Retirement Investments
How are they performing? Do you need to shuffle some things around? If you are relatively young and far from retirement, you can keep investing in stocks but things change as you get older. The closer you get to retirement, the less chances you should be taking. You may not have the time to let your money recover if the market were to dip. Shift more and more of your money into bonds as you get older. This way you can be sure that the money is there when you need it. - Adjust Your Savings
Your finances have probably changed over the year, hopefully for the better. Are you still saving enough? Adjust your savings withdrawals so that you are saving at least 10% but preferably 20% of your net income. If you have not done so, set the withdrawals to happen automatically by your bank. It is easier to save if you never see the money. Set up the withdrawals on the day you get paid. If you are bad about keeping the money in savings, move them to a bank that is separate from your checking account and cut up any ATM card that they give you. - Review Your Goals
Is has been another whole year so it is time to review those goals. How are you making progress and do you need to make some adjustments? This is the time to keep yourself on track and possibly make some new goals. If you have reached a milestone, set the mark higher for next year. You need to keep pressure on yourself to do a little better each year. - Financially Declutter
It is time to get rid of those old documents and shred them for safety sake. It is recommended that you keep 7 years of tax returns. Beyond that, it is shred time. Be sure to also shred documents that you no longer need like bill statements and anything else that might have personal information on them. Particularly sensitive and/or important documents should be kept safe offsite. Get a safe deposit box at your bank. They are cheap insurance.