Sometimes in life to stay on track, you have to do things that aren’t fun. Whether it’s an annual trip to the dentist or spring cleaning, certain activities have long term benefits that are reaped by sucking it up and doing what you have to do for a few hours once or twice a year.
If you hate personal finance and avoid all things money (other than just making and spending it), it’s time to put your foot down and get your mid-year financial checkup on.
You should really keep an eye on your finances at least monthly, but even if you are vigilant about budgeting and using every frugal trick up your sleeve, there are still certain items you should review at least once a year. Even regular brushers and flossers can still get cavities — those regular dental visits minimize how often they appear and make it easy to take care of them when they are there before they turn into root canals.
Step One: Budget
This is the first step in your personal finance journey. Review your existing budget and make sure it still makes sense. When you’re new to sorting out your finances, it’s easy to set your budget and, once you’re actually staying within its confines, forget about it.
But life changes and so should your budget. Thinking of having a baby? Maybe it’s time to add a new line to the budget. Really hate your job and want to switch careers? You can practice for life with a lower income — or temporary year or two as a student again — by changing your budget.
Maybe you paid off all your debts and have a surplus now. Where is it going? Have you changed your budgets to account for that or have you just been spending it?
Maybe you don’t have a budget yet. If you don’t know where your money is going each month, you’re really missing out on a key financial tool. Budgeting doesn’t even have to be that painful these days.
There are endless websites that can provide you with free printable sheets to use. Websites like Mint and LearnVest automate your budgeting — you can just link your bank, investment and credit card accounts and set your desired spending and saving goals and you can keep up to date on how you’re doing by logging in. They even send you email reminders when you are close to your budget limits in each category or when you achieve a savings goal.
Step Two: Insurance
Another thing to check yearly is your insurance coverage. While you probably made sure you have enough coverage when you obtained your plan (you did, right?), life changes.
If you had a baby, had a spouse leave the work force, moved to a more or less expensive house or sold off a lot of items, then you might need to change that coverage.
Sometimes you can get along with less coverage. Did your youngest child just graduate college and you are totally free and clear of helping your kids financially? Check out your life insurance and see if you really still need as much coverage as you did when your kids were little and there was a big mortgage on your house. Odds are, you don’t.
Has your car depreciated so much it’s worth next to nothing? There may be aspects of your car insurance coverage that you can remove. If your car is only worth $500 and you’re paying over $1,000 in insurance each year, it might save you money. It’s worth an hour of your time on the phone discussing it with your car insurance company.
Make sure you have an updated list of all your belongings for your homeowners or renters insurance in case you ever need to make a claim. Now is the time to review and update that list, or make it in the first place.
Step Three: Investments
The final area that you have to keep an eye on are your long-term investments. While buying and selling stocks quickly isn’t the best long-term investment strategy, you do still have to make sure that your portfolio stays balanced and that what you have invested in is still a good investment.
As you get older, it’s wise to move your investments so that a higher percentage of your money is invested in less volatile vehicles like bonds instead of stocks. Rather than fretting about it all year, just use this annual checkup to make sure you’re still on track.
Just like everything else that’s good for you in life, keeping your finances under control can by done by developing a few good habits and then an annual in-depth checkup.
More from U.S. News
10 Ways to Improve Your Finances with Social Media
12 Millennial-Inspired Ways to Spend Less
Three Steps for Your Annual Financial Checkup originally appeared on usnews.com
