Financial Checkup – 9 money questions to ask yourself

Every year around this time, our social media channels get clogged with two types of posts: “resolutions I’m making for the new year and why you should too” or “why I don’t make resolutions and why you shouldn’t either.”

We get pretty bossy online, don’t we?

That’s why I didn’t sit down to write a post about financial resolutions, even though I really, really want you to make some. I mean, if you’re setting goals for the new year about your weight, your health, your career or your personal life, why not set some financial objectives too?

And even if you’re anti-resolution, doesn’t it make sense to take a long hard look at your financial situation and figure out how you can improve it in the new year?

Of course, it does.

Hence the financial checkup. Fun for resolutioners and non-resolutioners alike.

To perform your financial checkup, grab a notebook and jot down the answer to these nine simple questions. If you like your answer, put a star by it. If your answer is unsatisfying, could use improvement or scares the hell out of you, list three things you can do to get on track.

How did my credit score change?

You are checking your credit score regularly, right? You can request a free copy of your credit report from each of three major credit reporting agencies – Equifax, Experian, and TransUnion – once each year at AnnualCreditReport.com. A score above 650 is considered ok while 750-850 is considered excellent. Need to pull yours up? Here are 11 Ways To Raise Your Credit Score, Fast.

What’s my debt situation looking like?

Yes, there is such a thing as good debt: mortgage payments and student loans are helping you move forward in life. But credit card debt and debt that you can’t keep up with is the kind you need to work on, stat. If you feel like your money’s already spent before you make it, you need to understand your debt to income ratio how to get it back on track.

How much can I save in the new year?

You’ve heard about that crappy article on Elite Daily that says “If You Have Savings In Your 20′s, You’re Doing Something Wrong?” I’m not even linking to it because it’s so much crap. Saving money is critical to your financial – and mental – health. Just say no to YOLO. Aim to save at least 20% of your income. (Remember the 50/30/20 Rule.) Are you on track? What expenses can you cut to get there?

Am I living up to my earning potential?

Pretty much everyone I talk to wants to make more money, but a lot of us don’t know how to make it happen. Women and Millennials are especially reluctant to negotiate for higher salaries and it’s costing us big time. Make this the year that you take a long hard look at your compensation and what others are getting paid in similar positions. If you have a review scheduled, are offered a new job or just feel you’ve earned a raise, go in armed with a fair assessment of your value to the company. Do NOT undervalue yourself out of modesty, shyness or fear of being seen as too aggressive. Here are some tips for negotiating a higher paycheck in the new year.

How’s my emergency fund coming along?

Yes, I’m bringing up savings again. It’s that important, as I learned that time I got fired. Or when a drunk driver totaled my parked car. Or when someone stole my laptop. A recent study says that 29% of Americans have no emergency savings. Scary, right? Having three to six months of salary in the bank, beyond your regular savings account is ambitious, I know, and something you can work slowly toward. But the peace of mind that comes with knowing you’re covered when the unexpected happens is immeasurable. Don’t be afraid to open two different savings accounts. Your emergency fund is one you don’t touch except in the event of an actual emergency – like the loss of a job. Your regular savings account is a bit more flexible – you can use it to for the down payment on a house or that trip to Paris, though you never want to deplete it. If you can only manage one right now, make it an emergency fund.

Does my budget need fine-tuning?

You did get that budgeting tool I told you about, didn’t you? Are you finding yourself in the red most months? Reaching for your credit card too often? Or unable to meet your savings goals? It’s time to readjust your categories or get a little more disciplined. The next two questions may help you out.

Are there any fixed costs I can cut?

Fixed costs are the ones you pay every month: rent, utilities, insurance, cable, Netflix, phone bill, etc. As you perform your financial checkup, ask yourself, “Do I have any wiggle room?” For instance, I’ve noticed I watch way more Netflix than cable. Do I need both? And my data plan? By reviewing my usage, I found out I could really use a smaller plan. Even reaching for a sweater rather than the thermostat can help you save on your energy bills. Look at all your fixed costs and see where you can save. Put the extra money towards paying off debt or building your savings.

Are my credit card(s) working for me or against me?

Are you paying off your balance each month? Earning rewards or paying too much interest? Can you consolidate your credit card balances onto your lowest-interest-rate card? Here are some tips for choosing and using credit cards wisely.

Letting your finances run on autopilot can be a costly mistake but a financial checkup every few months and definitely at the beginning of the year can make help you be money smart from the start.

How about you? How often do you perform a financial checkup? Anything you want to work on in the new year?

Featured image: Kate Spade Glitter Bug Slim Bee. On sale, of course.

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