Give yourself a financial check-up once a year

checkupYou change your oil in your car every 3000 miles, change the filter on your furnace every 3 months, and change the batteries in your smoke detectors twice a year – but when was the last time you gave your finances a complete check-up? Financial experts recommend that you look at your financial situation at least once a year to see how you are doing, especially as you prepare to add college expenses to your budget.

Here are the items you should look over for changes or updates.

Budget

Each year you should re-evaluate your household income and expenses to see where your money is going. The goal is to be able to pay down debt while saving money so you can eventually get ahead. If you have strayed from your budget since the last time you examined your finances, this is a good time to reset spending and saving priorities. Budget does not have to be a bad word: it will enable you to eventually, and intelligently, purchase what you want without going into debt.

Savings

Saving for your retirement is wonderful, but you should also have a savings account that is easily accessed in case of an emergency. Financial experts have always suggested having at least 3 months income put aside for a rainy day so that is a good start for a goal. Each year you should evaluate your income versus your expenses and decide just how much you can put aside for your savings. The best course of action is to make the savings a priority and put that amount away first before letting your expenses get the best of you. Even if you are only able to put away 5 to 10% of your income each month, you will be surprised at how fast it adds up.

Pay down credit card debt

Each year you should look at your credit card debt and decide how much you can afford in payments with the ultimate goal of eliminating it. Consolidate your debt onto low interest cards as much as possible and be sure to make the highest payments on the cards you pay the highest interest on. You can get out of credit card debt with some careful budgeting and a little willpower.

Check your credit report

You should check your credit report often, but if time has slipped by since the last time you checked it, now is the time to do it. If you’ve canceled any credit cards over the past year you will want to make sure they have been taken off of your report. You will also want to check for signs of identity theft. Keeping your credit report clean will help you acquire lower interest rates when you go to the bank for a loan.

 

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