The New Year provides a great opportunity to sit down and review your finances. Use the tips below to help you get started. For a more in-depth checklist, check out the FDIC’s Fall 2014 Consumer News that focuses on an array of financial checkup topics.
1. Determine Your Net Worth. First, you will need to gather all your financial documents. If married, don’t forget to include your spouse in your financial checkup. Gather checking and savings account balances, retirement and investment account balances, all loan and credit card balances and all other debts owed. Collect all possible financial account information and, review current accounts online. Then print and fill out a net worth worksheet like this printable worksheet from SaveandInvest.org or download an excel worksheet version from Vertex42.com and let it do the calculations for you. The net worth worksheet will provide a snapshot of your overall financial situation. If you document your net worth each year it will help you visualize your financial progress and focus your goals.
2. Set Goals. Use your net worth worksheet to help guide your goal-setting for the year. A visual guide can help you determine if you can put more money toward savings, debt repayment, etc. Consider setting goals for the short-term (3-6 months), mid-term (1-5 years) and long-term (more than 5 years, including retirement). Focus on setting SMART goals, those that are Specific, Measurable, Attainable, Realistic and Timely. There are online calculators to help with retirement goal setting (see resources below blog post).
3. Make Plans Automatic. Setting goals is important but sticking to the plan may be a little more challenging. Consider making your plans as automatic as possible. You might want to defer funds for debt repayment into a different account than your regular checking account. You may also want to set up automatic deposits from your pay into a savings account, for military or government civilians – you can use a discretionary allotment to do this. By setting up automatic withdrawals from your pay you will never “see” those funds in your account. Military Saves Week in February provides a great opportunity to save with many military banks offering incentives and matching funds to help you increase your savings. Stay tuned to the AMBAHQ.org website for more information on special promotions and offers from your military banks as Military Saves Week 2015 approaches. Here are some of the incentives and promotions the military banks offered for Military Saves Week 2014.
4. Protect Your Money and Avoid Scams. Protecting your money and avoiding scams are very important places to focus your financial checkup. Knowing where to go to find out about current scams is a vital part of protecting your finances. The Federal Trade Commission, FINRA Investor Education Foundation, and the Council of Better Business Bureau’s Military Line all offer newsletters and information with a military and veteran focus. Consider signing up for alerts and notifications to keep yourself informed about potential threats.
Resources and Calculators:
SaveandInvest.org Financial Calculators
Social Security Administration Retirement Estimator