Life is busy, as it should be, but when there is more than just yourself to consider it is important to stay on top of your financial situation, as a little bit of mindfulness goes a long way! Take the time to review these 8 financial steps yearly to keep your family’s financial well-being in order.
Finances can be hectic to keep up with, especially as your family grows. While it is best to keep a watchful eye on your finances regularly, it’s also important to do a deep dive at least once a year to make sure everything is in order. Then throw your worries to the wind and spend time with that precious family!
With so many accounts and financial responsibilities, it can be hard to know where to start. Let’s take a look at the top 8 financial check-ins you should consider reviewing at least once a year.
1. Set financial goals
You and your spouse should set aside time once a year to do a thorough overview of your financial situation, discuss your financial goals, and come up with a plan to achieve those goals. While you should sit down with your partner at least once a month to discuss finances, this yearly check-in should be a bit more comprehensive. During this conversation, you should plan to talk about the following topics:
- Any changes in income and how you plan to adjust your spending habits based on those changes.
- Your retirement plan, any retirement accounts you contribute to, and what changes you may need to make to reach your retirement goals.
- Your outstanding debts, how much you have paid off, and a plan of action to continue paying off your debt.
- Any large purchases, like buying a house or a new car, that you need to make and how you plan to save and budget for them.
- Any financial goals, whether that’s together or individually, that are important to you and your family.
Once you have a clearer understanding of your financial situation and the financial goals you have in mind, you can prioritize your goals and create a roadmap to help you achieve them.
2. Update your budget
While it’s not impossible to manage your finances without a budget, it sure does make it a whole lot easier to have one.
Your budget should be revisited on a semi-frequent basis—not necessarily just yearly. But, you may have different goals or priorities in mind during a yearly check-up that can impact how you budget.
As you sit down to review your budget, look at the following:
- Any changes in your income.
- Any changes in your major expenses.
- What you and your family primarily spend your money on and whether or not you should cut back on spending.
- How your financial goals may have changed.
- If your budget serves you and your family or if you need to make some updates.
Having your budget overhauled yearly will help you and your family successfully budget to keep your financial goals in mind.
3. Evaluate your emergency fund
It seems like when it rains, it pours. And sometimes, a bump in the road can set you and your family back financially. That’s where an emergency fund comes into play.
The goal of an emergency fund is to set aside money that you only touch under certain circumstances. That could be a loss of a job, a medical emergency, or whatever other financial emergency you and your family may run into. A good rule of thumb is to have between 3-6 months' worth of your expenses saved up and set aside.
Now, if you have an emergency fund started already, now is a good time to review that account to see how it’s doing. If you have enough money saved up and feel secure with your account, you may want to start putting your monthly contributions towards other accounts. Or, on the other hand, you may want to continue bulking up that account until you and your family feel comfortable and confident with your emergency fund.
If you don’t have an emergency fund, now is the perfect time to get one started. Look at your family’s monthly financial responsibilities to get a better idea of how much you may want to save. Do some research into some different savings account options for your emergency fund and decide which will give you the most bang for your buck. Start setting money aside monthly and check on your emergency fund semi-regularly.
4. Get a life insurance policy
Many people assume that life insurance is financially out of reach for them, but there are plenty of affordable life insurance policies out there that can easily fit into your family’s budget.
Life insurance can help your family financially recover if you or your spouse were to pass away. The death benefit can be used for funeral expenses, to pay off any outstanding debt, or even just to keep up with your family’s day-to-day expenses.
One of the best ways to find cheap life insurance is to browse online and get a few quotes. More often than not, term life insurance is an affordable option in comparison to something like a permanent life insurance policy.
Some insurance companies now offer an accelerated type of life insurance that eliminates the need for a manual underwriting process, making policies much more affordable and quicker to get. All you have to do is fill out the application and detail your health history, lifestyle, and financial situation. Once you apply, you can get a quote for a policy in a matter of minutes. This way, your family is quickly protected financially and your monthly premium will be well within reach.
5. Shop around for insurance
While on the topic of insurance, you should do a yearly check-up on your other insurance policies to make sure you aren’t overpaying. The best way to do this is to shop around for and compare quotes on car, home, and any other insurance types your family may need.
Lots of companies and websites are available that make it incredibly easy for you to compare prices. It may take an hour or so to shop around, but that hour could save you a good bit of money every year.
You should check to see if there are any discounts available. Oftentimes, companies will give discounts to people in the military or teachers. You may be able to bundle your policies to save even more money too.
6. Analyze your credit report
Your credit score is another financial element that you should check on regularly, but it’s a good idea to give your credit report a thorough overview to make sure you don’t see any errors that could negatively affect your credit score.
You can request a free credit report from Equifax, TransUnion, and Experian once a year. Each report may look a little bit different, but they should all be relatively similar.
Your credit report will include the following information:
- Personal information - This section will detail your name, social security number, birth date, etc.
- Employer history - While your employment history is not considered in your credit score, your report will include your employment history as a way to identify you.
- Credit history - This details all of your current and closed accounts from the last 7-10 years, payment history, loans, account statuses, and more.
Review all of the sections carefully to make sure that all of the information is correct. Any error, even a misspelling of your name or an incorrect digit in your social security number, could mean that your report is inaccurate.
When reviewing your credit report, you should spend the most time reviewing your credit history. When reviewing your credit history, make sure that the following information is correct:
- Account numbers and names
- Balance amounts
- Payment history, due dates, and status.
Make sure all of the accounts belong to you and that there are no errors in your report. Make sure to dispute any errors with the credit bureaus.
7. Organize or update an emergency binder
If an emergency were to occur where you or your partner could no longer take care of your family’s financial obligations, you need to have all of your financial information in one place so someone can take over.
An emergency binder can help you store your personal financial information and any other important documents that may be needed. You may want to include the following information in your emergency binder:
- Bank account numbers
- Login information for online accounts
- Insurance information
- A copy of your will
- Personal details about you
- Personal details about your family members
- Information about bills
- Information about loans
- And any other important financial information.
In an emergency, someone would have all of the information in one place so that it’s much easier for them to take care of your financial responsibilities. It’s also helpful to have your family’s information all in one place so that you can revisit it from time to time when updating any of your financial information.
You can create a physical emergency binder and store it somewhere safe. You may want to keep a copy of everything online, too, so there are a few ways someone can access it. Tell someone you trust where it is so that they can access it in case of an emergency.
8. Review your subscriptions
Subscriptions—from streaming services to apps—should be reviewed at least yearly to ensure you are only paying for what you need and use. While they may only be a few dollars a month, subscriptions can easily add up and cost you and your family a lot of money in the long run.
Take a look at all of your subscriptions and sit down with your family to decide whether or not you use that subscription enough to keep it. Cancel any unused subscriptions and even check to see if there are any discounts or subscription bundles that you can take advantage of. While it may not seem like much, cutting back on subscriptions can free up some of your family’s money.
Keeping up with finances can be overwhelming for anyone, and that is especially true for families. Make sure you are doing your due diligence and reviewing these 8 financial responsibilities to keep your family’s financial well-being in check.