How to Perform a Financial Health Check Before the Year Ends

Review your finances this year

Calculate how much money you earned over the year and identify the leading source of your expenses. This step will be a lot easier if you have a written budget and an expense tracker that you keep religiously.

If you notice that your expenses are higher than your income, consider making changes to your lifestyle. Perhaps you can tighten your leash on your expenses or look for ways to boost your income.

Check your savings account

The most direct way of diagnosing your financial health is to have a thorough look at your savings account. Ideally, most of your money is saved in this account, so it’s a good practice to check its status to ascertain your financial health. Through your savings account, you can get a clear picture of how much disposable income you have on hand.

How often do you put money in your bank account? Were you able to make consistent contributions to your savings, or was it done haphazardly? Reflecting on your saving habits can help you correct your course later on.

Check your investment portfolio

If you’re smart about your money, you understand the importance of investing your money in various instruments. That is putting all of your eggs in one basket is the quickest way to lose cash. Stay on top of your investments by reviewing the risks you can afford to narrow down the viable markets that you can invest in.

You should also review which of your investments are winners and losers, then make a decision: should you cut your losses or hold? Stay true to your investment goals and remove emotion from the equation.

Account for all existing liabilities

As mentioned, knowing where you’re spending your money is vital in assessing your finances. Check your bills if you have anything you can deduct from your spendings. If you don’t watch that much Netflix, maybe it’s in your wallet’s best interest to end your subscription.

As much as possible, you should not have any outstanding balances for loans you’ve taken, as that means carrying over loan payments into the coming year. If zero balance is not achievable, ensure that you don’t take on new loans to keep your liabilities at manageable levels.

Figure out your net worth

Once you have a clear understanding of your finances, you can then look into your net worth. Calculating this only requires a simple formula: add the respective values of your savings and investments before subtracting your liabilities from the total.

Knowing the exact figure of your net worth is one way to determine how your lifestyle is affecting your financial health. If you have a specific financial goal, your net worth can give you an idea of how close or far you are from achieving it.

Look into your credit score

Your credit score is another barometer of your financial health. Since there is no way of knowing when you may suddenly need cash, the ability to quickly get approved for a loan can be helpful.

While finding out your credit score sounds intimidating, the process of knowing it is relatively simple. Use the CIBIApp to get a better idea about your credit score or send them an email!

Think about your insurance situation

Another great sign of financial health is having an operational insurance policy. There are plenty of policies available in the market that offer varying levels of protection. From life and VUL policies to HMOs and health insurance products, there are plenty of options to choose from.

If you’re looking for a reliable policy, consider getting BPI AIA’s Build Life Plus. Build Life Plus is a combination of a savings account and a life insurance plan that allows you to grow your money and provide a safeguard for your future.