Whether you are single, newlyweds, or married for decades, a financial wellness checkup is important for any household. However, it can be confusing and even overwhelming to put your financial house in order. There are some basic steps you can take to make sure you are financially on track.
Why Do a Financial Wellness Check?
According to an article by CNBC, financial stress causes the most problems with relationships. Nearly 35% of couples said that financial issues were the main cause of stress in their relationships. One way households can reduce this stressor is by communicating with each other about their financial health. This knowledge not only helps you make better money decisions, it improves the level of trust between you too.
Make a Budget and Stick to It!
If you have yet to make a budget, now is the time to do so. A budget will show you how much income you make, what your expenditures are, and helps you identify unnecessary expenses. Information you need to compile your budget includes:
- Your income from all sources: employment, investments, property (rental income), gifts, etc.
- Your expenditures: mortgage/rent, food, clothing, credit cards, car payment, insurance, health expenses, entertainment.
As a reference, you can use credit card and bank statements to determine your income and expenses. If you are making a budget for the first time, track your numbers for three months so that you have enough information.
Check Your Savings
An important part of your financial wellness checkup is making sure you are saving enough money. According to TIAA, a retirement investment company, the average American should save between 10-15% of their income annually. This can be split between a retirement plan (IRA or 401k) and emergency savings. They suggest that an emergency fund should be able to cover between 3-9 months of expenses. If you don’t think your savings are where you want them to be, evaluate your budget to consider where you could save more.
Plan for the Future
It’s also a good idea during this time to think about possible future expenses. For instance, if you are:
- planning a vacation.
- buying a car or house.
- anticipating major repairs to your vehicle or home.
- or expecting to grow your family.
By anticipating potential expenses, you can be better prepared when they occur.
Double-Check the Paperwork!
Don’t let the small-print keep you from ensuring the appropriate paperwork is in order for you and your family. Some things to consider are:
- Do you have paper copies of all important financial documents?
- Is the contact/billing information current?
- Do you have your next-of-kin wishes updated for your investment and assets? Do you have a will?
Inaccurate paperwork, or that which does not reflect your current wishes, can cause big problems if you become sick, injured, or pass away.
How Can I Keep Track of This?
All of this information can be daunting and even stressful. Yet, there are plenty of online tools for creating a budget, estimating how much you need for retirement, and for setting financial goals. One website, Mint.com., is a one-stop-shop. The way it works? You simply sync your accounts to the site, which takes the information and creates tables and graphs to easily view the data. It can also help you set financial goals, reminds you of upcoming bills, and even gives you your credit score!
A financial wellness checkup does more than track your finances. It is a way to make an “investment” in your relationship by ensuring you are both on the same page when it comes to money. This means you can make better decisions together and plan for your future. After all, you’re in this together!
Denise Kautzer is a Licensed Professional Clinical Counselor and a Certified Public Accountant whose practice is located in St. Paul, MN. You can view her website at www.denisekautzer.com or contact her at denise@denisekautzer.com.