The Benefit of Having Your Annual Financial Check-up


As a family-business advisor, whenever I meet with clients, we invariably discuss their goals, objectives and yes, even their dreams. In many cases, there are obstacles that can put a dent in these plans. Changes occur constantly in life: marriage, the birth of a child, a major purchase, divorce, retirement, illness and so on. Isn't it curious that we check our house, our cars and even our bodies on an annual basis; however, when it comes to our personal financial affairs, we tend to ignore them until there is a problem or a major life event? Why do we do this? Well, that's a topic for a separate article, but I can provide you with a checklist for reducing your financial stress. (Think of me as your financial psychologist as many of my clients do.)

For your consideration, below is a list of my top 10 recommendations to jump start the process to improved financial health. Not only will your doctor be pleased with the results, but so will you.

Set financial goals (not just for first-timers): Both short- and long-term goals. Otherwise, it is like steering a rudderless ship. Articulate your thoughts by putting them on paper. Discuss them with your trusted advisor(s). Set predefined times to review and revise your goals accordingly. I review mine annually unless a major life event occurs in the interim. Determine net worth (total assets less liabilities): What is your net worth today? Where you want it to be in a year from now? Where do you want it to be over the next five years? If you don't track it, you can't react to life events. Budget: Do you know whether you are spending more than you earn? For example, look at your debt load and see which direction it is going. It is easy to have a false sense of security, given low interest rates, but they will not remain low forever. Develop a habit of tracking your cash flow. It is now much easier with the software packages that are available today. The payoff is enormous when you take the time to see if your money is being put to the best use. Minimize income taxes: Take the time to spend with your accountant and ensure that the appropriate strategies are implemented to minimize your taxes. Managing debt: Review the makeup of your overall debt load. Can you lower the interest rate you are paying? Would consolidating your debt help in attaining a better rate? Is there an opportunity to convert non-deductible interest to deductible...

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