How to Do a Yearly Financial Check-In and Why it Matters

If there’s one thing life guarantees, it’s change. A year can bring new opportunities, unexpected challenges, and shifts in your financial priorities. Whether your circumstances have changed significantly or stayed relatively the same, taking time to complete a yearly financial check-in can help ensure you’re prepared for whatever comes next.

Here are six areas to review every year to stay on track.

Estate Planning

At least once a year, or after a significant life change, such as the birth of a child or grandchild, death of a loved one, or change in marital status, take time to review all of your estate planning documents. Keeping these documents current will provide peace of mind for you and your loved ones.

Confirm that your Will and Power of Attorney (POA) documents are still compliant and accurate, and review all account beneficiary designations to ensure your assets are passed along according to your wishes. More importantly, verify that your beneficiary designations and Will are aligned. Inconsistent updates between these documents can cause bitter family disputes and leave your assets to the wrong individual.

Since the laws around estate planning are constantly evolving, your safest option is to schedule a yearly financial check-in with your attorney to discuss any changes and make necessary adjustments.

Insurance Policies

A majority of insurance policies, such as auto and home owners automatically renew year after year. Take a close look at your policies and make sure they still align with your current situation. 

Talk to an insurance agent and have them review your policy. They may find that you’re paying for coverage you don’t need, or find a cheaper policy with the same coverage. Rules are always changing so making sure you’re covered will prevent unexpected issues in the future.

Credit Report

Even if you haven’t applied for credit in the last year, reviewing your credit report is an important financial check-in to do every year. It ensures all your information is correct, and can help you detect potential identity theft. Request a free copy of your credit report from annualcreditreport.com and review it for accuracy. Make sure your personal information is accurate and that all reported accounts and activity on your credit report belongs to you. If anything looks suspicious, or is not correct, contact the credit reporting agency immediately and file a dispute.

“At Diamond, we encourage members to be proactive about their finances,” Diamond Credit Union’s Membership Officer, Isabelie Pichardo said. “Regularly checking your credit report is one of the easiest ways to stay on top of your financial health.” 

If you have no plans to apply for loans in the future, it may be beneficial to freeze all three credit reports. That way, if anyone attempts to open a loan in your name, they will be blocked due to a credit freeze.

Retirement Accounts

A yearly financial check-in of your retirement accounts ensure your savings and investment strategy remains aligned with your financial goals, risk tolerance, and retirement timeline. As the markets shift, lifestyles change, and personal priorities evolve, your retirement plan may lose momentum and require adjustments to get back on track.

Depending on your age, you may be obligated to take a required minimum distribution (RMD) from your retirement account. Work with your financial advisor or tax consultant to nail down your precise withdrawal amount and deadline to prevent IRS penalties.

Schedule a financial check-in with your advisor to assess your portfolio and make any necessary adjustments. Diamond’s Financial Advisors are here to help you navigate changing market conditions, and ensure your retirement savings strategy remains aligned with your long-term financial goals.

Old Financial Documents

Financial documents, such as receipts, bank and credit card statements, paystubs, household expense receipts, and tax returns should be purged yearly. Because these documents contain personal information, they need to be shredded and not just thrown in the trash. Digital copies of all items should be permanently deleted as well. In the wrong hands, these documents can leave you vulnerable to identity theft and fraud scams.

A good practice is to shred any paystubs, credit card receipts, and bank statements from the prior year. More important documents like tax returns (including their supporting documents) should be shredded every 7 years, in the event the IRS requests an audit.

Household expenses such as home improvement receipts, warranty information, and mortgage documents can be shredded once you no longer own the item. The same goes with any titles or loan documents from vehicle or other auto purchases. 

The only documents that you should never shred during your financial check-in are Wills, Power of Attorney’s, and retirement/pension plan documents, unless new ones have been officially created and executed.

Budgeting

A yearly financial check-in is not complete without creating or revisiting your budget.

Creating a budget is much easier than you think. Once you’ve established your budget and start sticking to it, you’ll have a better sense of control over your spending.

If you already have a budget in place, the beginning of every year is a great time to re-evaluate. Look at what worked last year and what didn’t. Plan for the year ahead such as where you think you’ll be spending more and adjust accordingly.

Another area of your budget to review is your Health Savings Account, or Flexible Savings Account (should you have one). Look at health expenses from the prior year and see if you need to make adjustments for the upcoming year. For an FSA, those funds do not carry from year to year like the HSA funds do. Make sure you use up the funds before the end of the current year (or grace period if available.)

As a Diamond member, you don’t have to complete your yearly financial check-in alone. Diamond’s certified HERO Financial Counselor’s can help you create or re-evaluate your budget, and provide guidance to keep you on track. Schedule an appointment today!