Annual Checkup

Give yourself this 10 point financial check-up.

1. Evaluate your new budget for the year. 
Here is the first question to ask.  Do you have a budget?  
Every single person and family needs to operate on a budget: young or old, rich or poor, single or married.  If you operate on a budget you will be able to maximize every dollar you earn.  I have heard some say, “I don’t have enough money to budget.”  If that is the case, you definitely need a budget.  A budget will help you to maximize every dollar.  Without a budget, the potential to waste resources is increased.

2. Evaluate your debt.
Here is the foundational question you need to ask.  Is the amount of my debt increasing or decreasing?  If you see that your debt has increased over the last 12 months, this should cause concern.  This reflects what is really going on in your financial life.  Increased debt shows that you are spending more than you are earning.  If this trend continues you are headed toward a financial crisis.

3. Evaluate your housing.
Here are the questions to ask:  Is this a good time to buy or sell?  Do you need a smaller/less expensive home or does your family need a larger home?  Is this a good time to refinance your home?  What repairs do I “really need” to do this year?  Do I have adequate insurance on my home?  

4. Evaluate your credit report.
Have you ordered and reviewed your credit report?  The federal government requires that the three credit reporting companies provide one free report during a 12 month period.  The official web site to order your free report is   ALL other sites are trying to sell you something.  Since there are three companies that are required to provide a free report each 12 months here is what I recommend you do.  Order a report from Equifax in January, Experian in May, and TransUnion in September.  If you follow this schedule, you will be able to monitor your credit report all during the year.  If you order all three reports in January, you will have to wait 12 months before you can order another report.  I also need to inform you that you will not receive your credit score when you order these free reports.  If you desire to receive your credit score you will have to pay a small fee.

5. Evaluate your crisis fund.
Do you have a minimum of 3% of your annual income in a crisis/emergency fund?  Three percent is your minimum amount.  Your next goal is to have an account equal to 1 month’s income.  Your long term goal is to have a fund equal to 3 month’s income.

6. Evaluate your life insurance.
Do you have adequate coverage for your family?  The general rule of thumb is to have 7 to 10 times your annual income. 

7. Evaluate your investments.
Do you need to make any changes in your current portfolio?  Do you need to make any changes in how new money is being invested?

8.  Do you have written financial goals in the following areas?
A. Giving goals?
B. Saving goals?
C. Reduction of debt goals?
D. Do you have a goal to become 100% debt free, including your mortgage?

9.  Evaluate your legal will?
Do you have a legal will?  When is the last time you read and evaluated it?  Does it say what you want it to say?  Every single person and married person needs to have a legal will.  If you don’t have a will, the state in which you live has already written a will for you.  If you don’t have a personal will, your state has already determined how your assets will be dispersed; who will become the guardian of your children, etc.  These important decisions should be determined by you, not the state.

10.  Evaluate your giving.
Be assured that giving is not listed last because it is least important.   How much of your income did you give last year?  Have you prayed about your giving?  What are your goals for giving this year? 


So how are you doing?  Is your financial house in order?  Did you pass the check-up?

©2009 Ethan Pope