Would you plan a cross-country road trip without giving your car at least a quick once-over before leaving? Practical judgment would suggest that you need to make sure your car is in good working order before setting off.
Likewise, before you take the plunge on a big financial commitment, it’s important to conduct a financial checkup. A financial checkup gives you the opportunity to see what you have done right, and wrong, over the past few months. This is especially important when you are headed toward accomplishing a large financial goal, like buying a home or purchasing a car.
If you’re not sure what updates you should implement during your checkup to help you take better control of your finances, here are some ideas to help you get started:
Bank account alerts
One of the easiest things you can do to help you stay on top of your finances, and to keep from wasting money on pesky overdraft fees, is to set up bank account alerts.
Overdraft fees cost $34 on average according to recent reports. This can quickly add up if you overdraft your account just a few times.
I set up an alert for my bank account a few years ago. Every time my balance goes under the amount I specified, my bank sends me an email letting me know that I’m under my threshold, and what my exact balance is as of the end of the day.
Checking your current insurance policies for coverage and the cost of the deductible is an important step in any financial checkup. Often, you may not question the coverage that you have until it is time to make a claim. However, at that time, you may wish that you had more coverage. On the other hand, you might be paying for coverage that you do not need.
Contact your insurance providers and speak with a representative about your policy. You might find, based on your personal situation, that you can save money by combining policies, increasing your deductible, or opting for less coverage in certain areas.
Automate payments and saving
Putting as many aspects of your finances as possible on autopilot can really help you make progress toward achieving your financial goals. For example, having money automatically transferred from your checking account to your savings account each month will remove the temptation to skip savings “just this once” in order to afford something else, like going out to eat or buying a new pair of shoes.
You can also automate many bill payments. These days many companies have an automatic payment system you can enroll in when you open your account. Or, if you’d rather have a little more control and ease of cancelling automatic payments in the future, some banks will allow you to set up automatic payments from your checking account. You can set up student loans, utilities, mortgage, and cable bills for auto-pay each month.
Completing a financial checkup can not only save you money as you set up systems to watch your income and expenses, but a thorough review can also keep you on track toward reaching your financial goals. That way, when it is time to take that journey towards homeownership or some other large goal, you’ll have peace of mind knowing that your financial engine is running smoothly.