The end of the calendar year is an ideal time to perform a personal financial-wellness assessment.  Through it you will be able to gain a clear picture of where you are now and begin to set targets for where you would like to go from here.  Of course, financial wellness is quite complex and multi-faceted, so if you find that you need guidance, be sure to seek it out!  At Independent Bank, we are eager to help and are pleased to provide such tools as our Money Management program to aid in tracking your financial health.

Below are two overarching questions to guide your assessment.  You’ll notice that under each heading are several subcategories pertinent to your financial wellness.  While these are by no means comprehensive, they will supply you with a solid starting point as you begin your year-end check-up.

Where Are You Now?

Spending & Saving 

  • What does your cash flow look like, currently? In other words, how does your income size up against your spending?  If your outflow exceeds your inflow, then you are living beyond your means and need to identify expenses to curtail or even eliminate.  Conversely, if your inflow exceeds your outflow, then you have extra cash to shuttle into savings and/or investments.

  • How’s your emergency fund holding up? Have you set aside the suggested three to six months’ worth of expenses?  If not, you may want to make this a top financial priority so that you won’t be caught off guard in the face of a financial emergency.

  • Out of your income each month, what percentage are you saving? 15% is a common target to shoot for.  If you’re coming up short, try each month to up your contribution incrementally as you reduce certain expenses simultaneously.

 

Debt Snapshot & Credit Health 

  • What are your outstanding balances and monthly payments? Now is a great time to check on the payoffs of any loans that you have.  Take a look at their respective interest rates as well, and if feasible, consider refinancing, consolidating, or paying down an extra portion on the loans that have higher rates (for example, credit cards).
  • Do you know what your credit score is? If you don’t, take advantage of your once-yearly free credit report by submitting a request at annualcreditreport.com.  Take note of any discrepancies or unfamiliar accounts.  (There shouldn’t be any — we hope!)  If you do find one, report the error so that it may be investigated.  It’s possible that it could be a product of identity theft, so don’t delay in addressing it.

 

Housing & Insurance Costs 

  • What does your mortgage situation look like? Would it be wise to refinance for a better rate and more affordable note?  Perhaps your current interest rate is higher than today’s average.  If that’s the case, consider talking with one of our Independent Bank Mortgage Loan Originators about the possibility of refinancing.  Check to see where your equity stands at the moment, and if you qualify, talk with your lender about nixing your mortgage insurance.

  • Are you adequately insured? Could you possibly find more affordable providers without skimping on coverage?  Beyond your homeowners, there’s auto, health (encompassing medical, dental, and vision), and life insurance to consider — as well as others that I haven’t mentioned.  While there is such a thing as being overinsured, it’s important, both for your finances and for your peace of mind, that you insure the essentials.

 

Where Are You Going? 

Imminent Expenses 

  • What’s coming in the year ahead that will have a big financial impact? If you’re on the verge of a significant expense, make arrangements now to be ready then.  Perhaps you’re expecting your first child (like my wife and I!) or anticipating a vehicle purchase.  Maybe you’re beginning a degree or looking to buy your first home.  Whatever the case, prepare for the major outlay before it comes.

 

Investment & Retirement Objectives 

  • What’s the status of your portfolio? Are your investments up to snuff?  If you’re underwhelmed and concerned by lackluster growth, take this opportunity to rethink your investment strategy.  Need guidance in charting a path forward?  Let us connect you with one of our advisors at Independent Wealth Management!

  • What are your desires for retirement? What income do you hope to maintain and large purchases do you wish to afford?  While assessing your portfolio, make sure to gauge if your investments are on track to meet those long-term objectives.  Again, consulting a reputable advisor can be very helpful here.

 

End-of-Life Planning 

  • Is your will up to date? Seize the moment to make any changes to your will that you see fit.  It may also be wise to use this time to brief a trusted loved one (perhaps your intended executor) on the location of the will, any special instructions or noteworthy details within it, etc.

  • If you’ve established a trust, are its terms and trustees still current? As with your will, be sure that any outstanding changes are applied now rather than later.  If you’re concerned about accurate wording and sufficient specificity, consider contacting a capable and reputable attorney to assist you with the revisions.

 

As 2021 winds to a close, make a resolution to evaluate your current financial position with the future in mind.  By developing a clear sense of both where you are and where you intend to go, you will put yourself in a stronger position to accomplish your financial goals, whether short-term or long-term.  To this end, we stand ready to serve you here at Independent Bank — in the new year and beyond!