The Financial Health Checkup: Assessing Your Money Matters




your financial health and wellness

Affiliate Disclaimer

As an affiliate, we may earn a commission from qualifying purchases. We get commissions for purchases made through links on this website from Amazon and other third parties.

Taking a look at your financial health can lead to massive savings and better financial outcomes in your life.

As someone who has navigated the ups and downs of personal finance, I’ve found that the start of the year offers a prime opportunity to take a closer look at your financial well-being. Establishing an annual tradition of conducting a comprehensive financial health check has been a game-changer for me.

Conducting a thorough financial health wellness check up every year is a great habit to get into.

This is probably one of the best financial exercises you can do to take control of your personal finances.

First, let’s understand why examining your financial health is so important.

Why is Financial Health Important? 

Believe it or not, there is a correlation between your financial health and your physical wellness.  People often underestimate how important it is to take care of their personal finances.

Currently, millennials are the largest generation in the workforce. They also struggle with financial health and financial wellness significantly more than generations past.   

The main driving reason for this has to do with the crushing amount of student debt that they carry.

They also have lower starting salaries due to the decade-long flat economy, although this is slowly changing.

These two issues, student loan debt and lower starting salaries, are the leading causes of poor financial health among millennials.

As such, there is a lot of worry they have such as:

  • Will I have enough this month to make my student loan payment?
  • Can I make my car payment?
  • Will my rent be late?
  • Do I have any money left this week for food?

If you have a lot of worry about your bills, that worry is not doing your physical health any good.

Maybe you are trying to get out of debt and thinking about your debt is keeping you up late or riddling your body with all kinds of anxiety.  All of that financial health stress is taking a toll on your body and robbing you from happiness in your life.

Worrying about your financial health will cause you to be less productive in all areas of your life.

Why kick off the year with a financial health assessment?

Having walked the financial journey myself, I’ve realized that the early months provide the ideal canvas for setting and scrutinizing your financial aspirations. It’s a time to revisit your financial goals and dreams.

During this time, you should look at your personal household budget to see how you did last year.

Compare all of your income and expenses for the year.

Some of the questions that will come into your analysis will be:

  • Were you able to meet your financial goals? 
  • Did you run short on cash?  
  • Did you pay your bills on time?
  • Where their expenses that were higher than what you budgeted for?

While you are taking the time to learn how to budget your money and reviewing your financial transactions, you should also review these areas below and make changes.  This way they can be incorporated into your budget for the new year.

financial wellness tips

If you want to change your finances (and your financial health) for the better, then take a look at these personal finance tips.  By reviewing these personal finance tips below yearly, you will be on your way to improving your personal financial health in no time.

How To Boost Your Financial Health Score

1.  Homeowners Insurance

It is always good to take a look at your homeowners insurance policy every year.  If you did recent upgrades to your home last year, you should let your insurance company know.  Often times, insurance companies will reduce your premium on certain types of upgrades.

Some of these would include a new roof, an efficient furnace, or a new air conditioner.

Also, if you have made expensive purchases within the year, you should update your policy to make sure those contents are covered.

For example, if you bought jewelry, art, wedding rings, or other expensive assets, make sure they are covered in your policy.  You don’t want a tragedy to occur and then come to find out your insurance policy never had these items listed.

Another thing you should look at in regard to your homeowner’s insurance policy would be the deductible that you have.  If you are looking for ways to save money, consider increasing your deductible.

Just know that if an emergency should arise you will have to have enough cash on hand to pay your deductible amount before insurance will kick in.

If you are looking for more extreme measures to eliminate your housing insurance altogether, moving into a housing cooperative can provide that opportunity

2.  Auto Insurance

Very similar to homeowners insurance, it is always good to review your auto coverage.  One area that people often overlook is if their policy covers car rentals.

When you buy or lease a new car, sometimes the dealership will include free car rentals with your purchase.  You want to be sure to ask about this when you acquire a new vehicle whether a lease or purchase.

Personal Financial Health Tip: 

  • Recently, I purchased a new vehicle and opted for a seven-year 100,000-mile warranty for an extra $21 a month.
  • I called my insurance company and dropped my car rental coverage.
  • My insurance premium dropped, and I ended up making six dollars profit per month on the deal!

Think about increasing your deductibles to lower your auto insurance premiums.

Another thing to consider is the age of your vehicle.  If you are carrying coverage for your vehicle and it is more than seven years old, it might not be worth it.  Depending what state you live in it may not be cost-effective to carry full coverage.

financial health and insurance

There will obviously be risk if you do end up dropping full coverage.  Say for example, a police chase takes place and during that chase your vehicle is damaged.

This happened to me (see smashed vehicle in picture above). 

The chances that your vehicle would be damaged in a high-speed police chase is not likely, but it did happen in my case.

Be sure you really weigh the risks when you think about dropping full coverage on your vehicle.

If you don’t have full coverage you will be out of luck on getting it fixed through insurance.  Again, laws do vary by state.

3.  Life Insurance

Among the array of insurance options, life insurance often gets overlooked, a mistake I made early in my financial journey. If you’re employed, there’s a good chance your company provides some group life insurance. But, as I’ve come to understand through experience, there’s more to this story that everyone should know.

What a lot of people don’t realize is that this type of insurance is only good while you are employed with that employer.  In other words, if you were to leave that job you would not have life insurance.

That is why it is good to have a supplemental term life insurance policy available.  Be sure to educate yourself on the different types of life insurance policies available to fit your needs.

Therefore, if you are caught in one of life’s transitions, you will have coverage for your heirs should anything happen.  Being able to cover all of your outstanding debts and not leaving them to family members to cover is just smart financial planning.

This is even more important if you have had significant life events take place such as getting married having children or your family structure has changed in another way.

Be sure you add and remove beneficiaries and keep your policies up-to-date to address these changes.

It’s also extremely affordable.  Take a look at these sample life insurance rates by age group based on the type of insurance policy purchased.

4.  Savings Rate

This is an important one.  If left unchecked you could actually be missing out on FREE money!

Be sure to check on your checking and savings accounts in the beginning of the year.  You want to make sure that you’re getting the most bang for your buck and your money is earning the maximum interest available.  With the feds raising interest rates, savings rates also increase and so does you financial health.

There are many banks out there that offer high-yield savings accounts.  The savings rates are much higher than the traditional banks.

Anyone can earn high interest and all you have to do is maintain a balance of $25,000 or make a $100 deposit every month.  I actually just switched to this bank because it was higher than the rate I was receiving.

5.  Check Your Credit Card Debt

Take a look at all of the debt payments you made last year.  Determine if you actually have more or less debt.

  • If your debt decreased, congratulations!  You are on your way to improving your financial health and building wealth.
  • If you have more debt, you’re going to want to look at your budget and figure out why.

There are adjustments you can make within your budget.  Be sure to take a look at our post on budget tips to help you reduce your debt.

6.  Credit Report

Another thing that should be reviewed within the beginning of the year is your credit report.  There are a couple benefits to doing this.

  • The first benefit is to alert you to identity theft.

Identity theft can have substantial impact on your credit and finances for several years if you don’t address it.  Many places such as offer free credit reports.  Be sure to take advantage of this.

  • The second benefit is that it alerts you to the status of your credit. 

By pulling your credit report you can determine how much credit you are currently using versus what is available.

Knowing this type of information is very important especially if you’re planning to buy a house in the near future.

If you have less than stellar credit you want to go into credit repair immediately and make the necessary adjustments to increase your FICO score.

You can still qualify and get a mortgage loan with a lower FICO score, but chances are your interest rates will be a little bit higher.

7.  One Time Expenses

Annual financial reviews offer a powerful advantage: the ability to plan ahead. Having faced unexpected financial burdens firsthand, I’ve learned that preparing for significant expenses early in the year can make a substantial difference. It’s about creating a financial roadmap that ensures you’re ready for life’s financial curveballs.

By planning your budget early in the year, you can designate money to save for these expenses.

Establishing these goals and coming up with an action plan, is a great way to cover one-time expenses and a great tool for money management.

Additionally, if you have outstanding checks that have never been cashed, be sure you follow how to void a check that may have never been cashed.

8.  Income Level

If you are like many middle-class working Americans, you have expenses that have probably risen while your income has not. 

There are a few reasons for this noted below:

  • The first reason they have to do with your current career.

You may be career-locked into a job where you just don’t have a clear path to advance within the organization.

  • The second would be that your current employer does not give raises higher than the rate of inflation. 

This basically means that you will never achieve greater than the cost-of-living status quo as far as income is concerned.

If you face these challenges with your income level, don’t despair.  There are a couple solutions to this and things that you can do to advance your financial health.

  1. Consider looking for a new job that offers more in the way of career advancement or switching careers altogether.  
  2. Try to come up with new passive income streams while staying at your current job.  This would include things such as investing in real estate properties and rentals, starting up some type of side business, or coming up with creative ways to make money.  Both of these however, may take substantial income initially.
  3. That leaves you with the third option which is working an additional job or  side hustle.

There are ways to make money online even as much as $1000 a month just by filling out surveys.  Be sure to check out my Swagbucks Review and also my Survey Junkie Review if you do want to make some easy money online.

You can read about the high profit strategy I came up with for Swagbucks and Survey Junkie that will easily allow you to make money with surveys and earn over $500-$1000 a month.

What is great about this is that this can be done in conjunction with your full-time job.

Therefore, it is all considered extra income which can help you get out of debt.

9.  Saving For Retirement

As part of assessing your financial health for the year, take a look at what your goals are for retirement savings.

It is good to do this in the beginning of the year because this is when IRS contribution limits reset.

If your goal is to save more for the retirement, the beginning of the year is a great time to increase your retirement contribution percentage.  It makes sense to do this if your employer offers a retirement plan.

There are a couple ways to calculate your contribution.

Strategy A:  Contribute Same Amount For Whole Year  

Follow these steps below:

  1. Figure out how much you would like to save for retirement for the year, then divide that amount by 26.  There are 26 pay periods within each year if you are paid biweekly.
  2. Take that amount and divided by your gross paycheck amount.

This will give you the percentage total that you will be contributing to your retirement.

Strategy B:  Use a Rate Escalator to Improve Financial Health

Another strategy that can be used is to use the rate escalator method.   This method is basically increasing your retirement contributions over a certain period of time by a specific designated amount.  This time can vary.

For example, maybe you want to contribute 5% towards your retirement savings plan initially.

Let’s say you want to have a rate escalator of 1% and have it increase every 4 months.

This would mean that after 4 months of contributing 5%, it would increase in the 5th month by 1% for a total retirement contribution of 6%.

Four months later, it would increase by the rate escalator to a total retirement savings contribution of 7%.

This amount is generally in the range of 1 to 3% most people use for their rate escalator.

For some individuals, it is very hard for them to save significant amounts for their retirement.  They may have a high cost of living or just a lot of expenses which do not allow them to save much.

By using the rate escalator method, they are still making small incremental increases to their overall retirement account balances and improving their financial health in their life. 

10.  Flexible Spending Accounts

Be sure that you also take a look at your flexible spending accounts if your employer offers these.  This is a way for you to contribute pretax money that can be used to cover certain expenses.

Not only does this help your financial health, but also your physical health as well.

Some of these expenses include things like medical charges, surgery procedures, and child care expenses. 

You do need to be careful because you only have a limited window in order for the expense to qualify for reimbursement.

Also important to note is that if you have contributed more money into your account than what your actual expenses are, you lose that money.  It is forfeited.

That is why it is important to have precise planning in the beginning of the year for this.   A good strategy is to budget a little bit less than what you think your expenses will be for the year.

Any left over expenses can still be deducted on your taxes.

11.  Loans

Take a look at your personal loans that you have outstanding each year and see if they can be consolidated or refinanced.

So many millennials have student loan debt that is crushing them and reducing their financial health.  Student loan debt is prohibiting them from achieving their financial goals and destroying their financial health.

It’s preventing them from buying a house and making other major financial investments and decisions.  Loans can really take a toll on your financial health.

One option to reduce your loan payments and save money is to consider student loan refinancing with SoFi to see if you can lower your monthly payment.

Your Financial Health Summary

Conducting a thorough review of your financial health every year is one of the best things you can do for your health and your life.  Not only does it financially prepare you for the year, but it can also help you address personal goals as well that may be important.

Proper planning of your finances every year does have significant benefits.  Managing your financial health is important in many ways.

By following the tips above, you will be able to decrease your financial stress, put your anxiety to rest, and may be able to get out of debt sooner than you think. 

Increasing your financial wellness and your financial health is key to becoming more productive, gaining financial independence, and living a life with less stress and financial worry.

And once you take control of your financial health and become “financially whole” again, you will see major improvements in your physical health and all areas of your life.

All it takes is a little planning in the beginning of each year.

Set the course.  Follow.  It is that simple. 

About the author

Latest Posts