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How Are You Doing? Find Out With A Financial Check-In

Written by PFW Advisors | May 1, 2024 2:00:00 PM

Regular financial check-ins are as vital to our financial well-being as routine health check-ups are to our physical well-being. Much like we pencil in appointments with healthcare providers to keep tabs on our physical health, evaluating our financial health regularly is just as important.

Financial check-ins are the basis of financial stability. They keep us aware of our financial condition, detect any possible problems right away, and make any necessary changes. Check-ins provide us with a holistic view of our financial status, allowing us to monitor our achievements and make informed decisions about our expenses, savings, and investments.

Setting The Stage: Establishing Personal Goals

Before engaging in a detailed assessment of your financial health, it is important to define your personal goals. Would you like to have a new house? Plan for your retirement? Get out of debt? Recognizing where your ultimate end goal is will set your direction for the financial journey and will help you to determine what to do and when. Combining your financial standing with your objectives will enable you to take active measures towards having a better future.

Understanding Your Financial Health

Defining Financial Health

Financial health is a comprehensive concept that includes many financial components. It is not just about having a high income or having a substantial net worth. It is about effectively managing your finances and reaching your goals while achieving financial stability and security. Income/expenses, savings, debt, and investment are the key contributors to the state of your financial health. Taking stock of personal goals and milestones regularly can give you insight into how far you’ve come and what you need to work on.

Income vs. Expenses

The connection between your income and expenses is a very important matter when you are judging your financial health. Having a positive cash flow, which is ensured by your income more than your expenses, is fundamental for financial health. Systematically examining your income sources and fixed expenses will help you identify the weak spots or areas where the amount of money is not used properly. This provides for financial stability, which can, in turn, be used for savings and investment in your goals.

Savings and Emergency Fund

Savings are usually viewed as the net income a person holds after paying for all obligations and are typically put aside in a savings account, CD, money market account, or checking account. Quite often, separate savings are put aside just in case an emergency arises. Establishing an emergency fund is crucial for being financially resilient and, therefore should be a top priority. Unexpected things, like job loss, medical emergencies, natural disasters, or major repairs, can put a huge financial stress on you. Having a dedicated emergency fund set aside may save you from borrowing or depleting long-term savings during crises. Experts generally recommend having enough savings to cover three to six months' worth of living expenses.

Debt Management

Too much debt can be a heavy weight on your financial health, preventing you from setting aside funds for the future. Examine carefully the debts you currently have, such as credit card balances, student loans, and mortgages. Devise the most effective debt strategies to see you through. These may include debt consolidation, renegotiating lower interests, or repayment plans. Getting out of debt doesn't just ease life financially, but it also frees funds that can be used for savings, investments, or to put toward your goals.

Investments and Retirement Planning

In many ways, investing is a key part of the plan for long-term financial security and wealth accumulation. Investment advisors such as PFW can help you choose the best investments for your specific situation and revisit your investment portfolio frequently to confirm that it matches up with your risk appetite, time horizon, and financial objectives. Explore the possibility of investing money from various asset classes rather than just one for risk reduction and increasing the overall performance, as well. In addition, review your progress against your retirement goals and make modifications where necessary to have a comfortable retirement.

Assessing Your Progress

Reflecting on Personal Goals

From time to time, go back and revisit your personal goals and see whether the decisions you make regarding your finances are helping you to move closer to realizing them. Through this self-examination, you may be able to see specific points where you may have to make changes or refocus your goals.

Tracking Financial Milestones

Be proud of your financial achievements by marking milestones, such as the elimination of a big debt, reaching a target savings amount, or hitting a certain investment return. Recognizing your accomplishments has a positive psychological impact and boosts motivation. Having these as checkpoints can be an inspiration and build upon positive financial behavior.

Identifying Areas for Improvement

Have an honest conversation with yourself and be prepared to acknowledge those times when your financial life is not perfectly done the way you had planned. Self-awareness and introspection can be difficult at times but are necessary to reach your highest potential. If you recognize your shortcomings, you may be able to make a plan for overcoming weaknesses and closing gaps needed for financial well-being.

Tools and Strategies for Evaluation

Budgeting Techniques

Establishing a budgeting plan will give you a clearer understanding of where your money goes and assist in making better choices about the way you manage your resources. As budgeting support, think about using budget apps, spreadsheets, or the envelop method. The envelope method is essentially portioning out your budget in cash and placing the cash into marked envelopes, which is one of the oldest methods of budgeting still in use.

Net Worth Calculation

Total net worth is an important financial metric that you can calculate by subtracting your liabilities from your assets. Calculating your net worth may enable you to make knowledgeable decisions about your financial strategies and track your progress toward your goals.

Using Financial Apps and Tools

Employ the power of technology through applications and online tools. These tools can help you record expenses, track savings, oversee your investments, and give you interesting analytics based on the ins and outs of your finances. There are apps and tools available for nearly any financial need or technological ability.

Adjusting Your Financial Plan

Revisiting Goals and Priorities

Over time, your life circumstances will change. Because of this, it’s important to reassess your goals and priorities. Have you changed your goals or plans for the future? Do you have new expenses that need to be budgeted? If your financial situation is different than when you first made your plan, then some adjustments will need to be made.

Making Necessary Changes

Upon the examination of your financial position, make timely corrections to your financial plan. For this, you may need to revise your budget, raise your rate of savings, or perhaps rebalance your portfolio to fit your objectives better.

Seeking Professional Advice if Needed

If you have a financial scenario that is relatively complicated or you are unclear about the best options to follow, you shouldn't hesitate to get help from a financial advisor. Their knowledge can be of great benefit to you and help you to make tough decisions about your finances. 

Celebrating Success and Staying Motivated

Recognizing Achievements, Big or Small

Celebrate even the small financial wins. Achievement of your milestones can boost your self-esteem and create momentum to forge ahead with your financial path. Awareness of your progress is important and congratulate yourself on any of your successes.

Cultivating a Positive Money Mindset

It is imperative to realize that financial wellness is a process of acting with discipline, planning, and commitment to your goals. Create a positive mental attitude toward money and finance management. Work on releasing scarcity mindsets you may have that could be holding you back.

Setting New Goals for Continued Financial Growth

As you reach your initial financial goals, set new goals to see more of your wealth grow. This is what will keep you going and ultimately ensure you’re always working towards increasing your financial wellness.

Periodic financial check-ins are an excellent way for people to maintain their financial health and realize their financial goals. Constant monitoring of your financial condition enables you to find areas to be improved, make wise decisions, and achieve security and stability. Regularly monitoring your finances enables you to have the confidence to embrace your financial well-being. With a comprehensive assessment of your financial health, you can act at the forefront, making financial decisions based on your values and future goals.

 

Achieving financial wellness is a journey, and often, the toughest step is the first. Commit to conducting financial check-ins frequently and take action to be your own financial master. The process may be trying at times, but don’t forget to enjoy the journey and pat yourself on the back each time you reach a milestone. 

 

Investment advice offered through PFW Advisors, LLC, a Registered Investment Adviser. Registration does not imply a certain level of skill or training. Any media logos and/or trademarks contained herein are the property of their respective owners and no endorsement by PFW Advisors, LLC or its representatives is stated or implied. The information contained herein is for educational purposes only. It is not intended to provide, and should not be relied on for, any tax, legal or investment advice. You are advised to seek the advice of a qualified professional prior to making any decision based on any specific information contained herein. The specific tax consequences of any investment or strategy will depend on your specific tax situation.
 
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