The journey toward financial security is one that — for many — includes lots of ups and downs along the way. One way to ensure you’re making progress toward your long-term goals is by doing periodic check-ins with yourself.
“Don’t be an ostrich when it comes to your financial situation,” says Terry Savage, a nationally syndicated personal finance columnist in Chicago and author of “The Savage Truth on Money.”
“Just because you don’t look, it doesn’t mean others aren’t watching. The credit bureaus, for example, keep track of your every payment and highlight the late payments,” she says.
Asking yourself the following questions can provide a gut check to let you know how you’re doing financially and potentially reveal areas in which you might be able to make changes to get on sound financial footing.
1. Do I Have an Adequate Emergency Fund?
Experts typically recommend keeping three to six months’ worth of expenses in a liquid savings account that you can access when unplanned expenses arise or if you lose some or all of your income.
You may need a larger emergency fund if you have multiple dependents or an unstable job, or a smaller one if you’re on your own and fairly secure at work.
[READ: How Your Employer Can Help You Build Emergency Savings.]
If six months’ worth of savings feels overwhelming, start small. Putting even a small amount of cash aside on a regular basis can quickly add up to a safety net that will protect you from having to use credit cards or borrow from a retirement account in an emergency.
2. What Is My Net Worth?
You can calculate this on your own by subtracting the total amount of your debt (your mortgage, car loans, etc.) from the total amount of your assets (your bank account and investment balances, the equity in your home, etc.).
More important than the number itself is that it’s moving — in the right direction.
“Once you know your net worth, you can continue to track it to make sure that as the months or the year goes by, you’re increasing your net worth, not decreasing it,” says Anne-Lyse Ngatta, a financial literacy advocate and founder of the personal finance website Dream of Legacy.
[Related:What Is the Average American Net Worth by Age?]
3. Does My Spending Reflect My Priorities?
Financial priorities are different for everyone. Some consumers, for example, might want to make sure that they’re purchasing only eco-friendly items, while others might believe that spending on experiences rather than things should be the goal.
“This question will help you determine if there are areas in your spending that you can cut back on or areas where you want to pour more into,” says Jesse Mecham, founder of the money management app YNAB.
If you’re unable to answer the question, it could mean that you don’t have a handle on how and where you’re spending your money.
The first step to take in that case would be to track your spending for a month or two to get a better sense of where each dollar goes — and how you feel about your expenses.
4. Have I Purchased Appropriate Insurance?
Having adequate car, home, life, health and disability insurance is an important part of maintaining financial security.
While your needs will likely change over time, it’s important to periodically conduct an insurance audit to make sure you have enough coverage to protect yourself and your loved ones in the case of a catastrophe.
5. Do I Have a Financial Planner or a Financial Blueprint for My Life?
Those who have a written financial plan have more savings and better-allocated investment portfolios — and they feel more confident about their finances, according to research from Hearts & Wallets.
“If you don’t have anything in writing, you’re like a leaf on a fall day,” says Tom Corley, author of “Effort-less Wealth: Smart Habits at Every Stage of Your Life.”
“You’re just going to float around, and you’re not going to have any guidance,” he adds.
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Personal Finance Questions to Ask Yourself Now originally appeared on usnews.com
