As physicians we all hope that our patients are getting regular check ups! For us as PEM providers, those regular well child checks allow our generalist colleagues to dole out the immunizations, provide anticipatory guidance, and identify trouble spots early while there may still be time to take corrective actions. Whenever we take our kids in for a well child check we try to have a few questions to ask the pediatrician to answer for us and internally are hoping to hear—everything looks good! Just like we need regular reassessments of our physical health, our financial health deserves regular attention as well.
Doing an annual financial Checkup can help you save.
–Adam Shell, USA Today
If you Google annual financial check up you will get over 586k results! Many people have produced forms that can assist you in going through an annual financial check up. Nerdwallet and Fidelity provide some really good ones that you can even print off and use for free.
Just as most appointments in the office shouldn’t take too long (and for PEM folks we really don’t want them to take that long!) your financial assessment shouldn’t take too long either.
First, gather up all your financial statements in one place, or more likely, open up browser tabs with your bank site, investment site, insurance site(s), student loan site(s), consumer debt sites (car, mortgage, etc…), and credit card sites.
Second, have a systematic way of approaching each aspect of your financial life.
Third, look at your budget—I know, deep breath. Look at the various categories you have in your budget and then compare what you actually spent in these categories over the past year. You may be surprised. My wife and I just did this yesterday and realized there were some areas we needed to adjust. Hopefully you will find that what you have coming in each month at least equals what you have going out. If you have more money spent each month than you make, it is time to make hard decisions about where you must cut spending. Before anyone asks, credit cards are not a way to make your budget work long-term! Included in your budget should be your debt payments, savings for emergency fund and retirement, and any other longer-term financial goals you have.
This brings us to the fourth item. Make sure your emergency fund is still at the level you desire it to be. If you planned to have 3,6,9 months of savings “just in case” make sure you still have it in the bank. You might have dipped in for any emergencies encountered over the past year, now is the time to fill it up.
Fifth, look at your debts and any plan you have for paying them off. If you are part of PSLF or PAYE then keep on making those government mandated payments. If you aren’t and are paying them off on your own schedule, keep it up and consider paying them off faster with any extra funds you have. Remember, in this sideways stock market, every dollar of your loans (or car payment, mortgage, etc…) paid off get’s you a return equal to the interest rate!
Sixth, look at your retirement accounts and see how they have done. Make any changes to your contribution to your 401k, 403b, 457b, SEP IRA, cash balance plans to get your nest egg up to the level you need it to be to give you the kind of retirement you desire. Use a retirement calculator to help figure this out. FIRECalc is a great one that is FREE!
Seventh, make sure you have adequate disability and if your situation calls for it, life insurance. Umbrella insurance is also a good idea if you are ever named in a lawsuit (car accident, malpractice, accident at home, your dog injures someone). This coverage allows your extra insurance to pay for judgments rather than your bank accounts or other assets!
Umbrella insurance is the best buy in the business
Eighth, check your credit report for free from each of the three major bureaus (Experian, Equifax, Transunion). Make sure there are no errors in these and if you see yourself applying for a loan get your FICO score as well. Some credit card companies offer this score for free, which determines the rate you pay on loans, your cellphone plan and even rent for your apartment.
By the calendar we are still in Spring so before we move into Summer, do some Spring cleaning of your financial world and make sure you are in tip top shape!
What do you think—do you do an annual financial check up or do you run the other way or cringe at the thought?
All the above should be considered as for entertainment purposes and should not be considered to offer legal, tax, or investment advice. We encourage you to obtain professional legal, tax, or investment advice prior to acting on anything contained in this article.
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