How to Conduct a Financial Check-In for the New Year

As the new year begins, it’s a good time to assess your financial situation and set goals for the months ahead. A financial check-in not only helps you evaluate your spending habits but also ensures that you’re on track to meet your financial goals. Whether you want to save more, pay off debt, or invest for the future, reviewing your finances now can provide a sense of control and clarity.

Here’s a guide on how to conduct a financial check-in for the new year, along with a handy checklist of tasks to keep your budget on track.

Conducting a Self-Audit of Your Finances

• Review your financial goals

The first step in your financial check-in is to revisit your financial goals. Reflect on what you set out to accomplish last year and assess your progress. Have you been able to save for a vacation, pay off credit card debt, or build an emergency fund? Identify areas where you made progress and areas where you fell short.

Next, set new financial goals for the year ahead. Experts say your goals should be SMART: specific, measurable, achievable, relevant, and time-bound. For example, instead of saying “I want to save more,” say “I will save $3,000 for a down payment on a house by December 31.” Setting clear, actionable goals will help keep you motivated throughout the year.

• Evaluate your income and expenses

The next step in your financial check-in is to take a close look at your income and expenses. Start by reviewing your income sources—salary, side gigs, investments, etc.—to ensure they’re accurate and up-to-date. If your income has increased or decreased over the past year, adjust your budget accordingly.

Then categorize your expenses. Go through bank statements, credit card bills, and any other financial documents to identify where your money is going. Look for any unnecessary subscriptions, impulse purchases, or categories where you’ve consistently overspent.

• Check your credit score

Your credit score plays a critical role in your financial health. A high score can make it easier to qualify for loans, credit cards, and mortgages, often at better interest rates. So be sure you understand what makes up your credit score. Review your credit report at least once a year to make sure all the information is accurate. If you spot any discrepancies, work to resolve them immediately.

If your credit score needs improvement, take steps to raise it. This could involve paying down high-interest debt, reducing credit card balances, or disputing any errors on your report. Aim for a score of at least 700 to be in the “good” range.

• Adjust your budget

After reviewing your goals, income, and expenses, it’s time to fine-tune your budget. A well-planned budget should reflect both your current financial situation and your future goals. If you’ve been consistently overspending in certain categories, make adjustments to stay within your means. Consider using a budgeting app or spreadsheet to track your progress.

One useful budgeting method is the 50/30/20 rule:

• 50% of your income goes toward needs (rent, utilities, groceries, insurance).
• 30% goes toward wants (dining out, entertainment, travel).
• 20% goes toward savings and debt repayment.

This method provides a simple, balanced framework for managing your finances.

• Review retirement and investment accounts

Take a look at your retirement accounts (401(k), IRA, etc.) and investment portfolio. Have you set realistic retirement goals? Are you on track to meet those goals? If retirement is in sight, make sure you understand programs like Medicare and Social Security. Both can impact your retirement lifestyle in significant ways.

Consider increasing your contributions if you’re able, especially if your employer offers a matching contribution. For investments, review your asset allocation and consider speaking with a financial advisor to ensure your portfolio aligns with your risk tolerance and long-term goals.

• Prepare for the unexpected

Make sure your emergency fund is sufficient to cover unexpected expenses. Aim for at least three to six months’ worth of living expenses in an easily accessible account. If you don’t have one, prioritize building it up this year.

Also, review your insurance policies—health, life, auto, home, etc. Ensure they provide adequate coverage for your current situation and you’re not overpaying for any unnecessary coverage.

Utilizing a Financial Checklist

Finally, we’ve created a tool we hope will help keep your budget on track in the upcoming year:

• Set specific financial goals for the year ahead (e.g., save for a down payment, pay off credit card debt).
• Review your income and update your budget if your salary or side income has changed.
• Track your expenses and identify areas to cut back or eliminate unnecessary spending.
• Check your credit score and resolve any issues.
• Adjust your budget to reflect your financial goals, using a method like the 50/30/20 rule.
• Review your retirement and investment accounts to assess whether you’re on track to meet long-term financial goals.
• Revisit your emergency fund and ensure you have enough savings to cover unexpected expenses.
• Review insurance policies to confirm you have adequate coverage and aren’t overpaying for any policies.
• Plan for any major upcoming expenses, such as vacations, home repairs, or education costs.

Get Help from an Expert

One final tip for people preparing for retirement is to seek the advice of a professional well in advance. What Are Elder Law Attorneys and How Do They Help Seniors? is a good article to help you learn more.