What a year it has been! It would have been difficult to predict and plan for all of the news and events that have disrupted our lives in 2020. Disruptions, whether good or bad, teach us one thing – you must always be prepared!

Recent history has moved many of us to take another look at our finances – a smart thing to do at any time. Perhaps it has been a while since you last took your financial temperature, or maybe this is the first time you’ve considered doing it. Either way, it is never a bad time to make sure you are healthy, financially speaking.

Like annual physicals, a yearly financial checkup can help uncover hidden problems, inspire you to set new goals, provide information you need to improve your well-being, and help make sure you’re on track.

You can begin your “fall cleanup” and preparation for 2021 by following these 3 steps:

Step 1: Review Current Status

A great place to start is with an assessment of your current financial situation. This assessment should include a review of any personal changes you’ve experienced this year, such as a change of employment, the loss of a loved one, a change in marital status, or a new addition to your family, which likely has impacted your financial situation.

As you identify these changes and how they may affect you, be sure to evaluate your current cash flow by tracking your income and expenses. Do you have a budget in place? If not, that is a great place to begin. Writing down your monthly income and expenses helps you visualize where your money is going. It is also a good practice to include a line item for your discretionary purchases. Just writing it down may help you pause when deciding whether to buy those extras.

Step 2: Define and Prioritize Your Financial Goals & Objectives

It can be difficult to reach a destination if you haven’t plotted your course from beginning to end. Setting some specific goals will help you achieve better financial health. Your goals should be realistic and measurable, which will help you hold yourself accountable. For example, if you have more credit card debt than you should, set a goal of paying off portion of it by a certain date. And, if your savings are slim, set a goal of saving enough money to cover six months’ of your living expenses within a defined period of time.

Maybe you’re on the right track with your savings and have little to no debt – this doesn’t mean you shouldn’t explore your situation further. Are you preparing properly for other future expenses, such as saving enough for your children’s education, setting enough aside today to cover your retirement needs, or for paying medical expenses as you get older? If nearing retirement, have you explored your social security claiming options? Have you revisited your risk tolerance to ensure your investment portfolio’s asset allocation is suitable?    

The key to change is becoming mindful of where change is needed. Whether you need to pay-off debt, save for unexpected emergencies, or build up your retirement savings, you should make it a habit to save regularly. Visualizing your goal will encourage you to keep focused on the bigger picture.

Step 3: Stay the Course

The one major obstacle that stands in the way of you accomplishing your goals is consistency. Like many of us working towards becoming healthier by eating better and working out, you can quickly lose all the progress you made if you start developing bad habits and don’t stay the course. It can be hard to change habits. With the assistance of a financial advisor, along with proper motivation and periodic progress reviews, you can do it. Remember, you are ultimately in control of your financial health.

How an Advisor Can Help

A financial advisor will work with you to help you periodically review your financial goals, assess your current financial situation, measure your progress, and adjust to changing circumstances. Additionally, a financial advisor can help you avoid obstacles that may get in your way and to stay focused on the priorities that are most important to your family.

Revisiting this checklist each year can be a great place to start taking control of your financial situation, and to help ensure you are adjusting properly for the key changes in your life.  


This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.