Time for Your Financial Literacy Check-up

April 2019

While most Americans associate April with the beginning of spring, the entire month is also dedicated to financial education. Spring cleaning usually consists of scouring every nook and cranny of the home, but our finances deserve a thorough scrubbing as well. If you’re not a personal finance junkie, diving into your financials can be intimidating. Still, you don’t want to ignore them for years and then discover you’re in trouble.

Here are a few financial tasks you should tackle in April:

1. File your taxes. Maybe you’ve already checked this one off your list, but if you haven’t, now’s the time to file, or request an extension. After you’ve completed the task, take a closer look at the numbers. Did you receive a whopping refund? Did you owe? In either situation, this means you may need to do some tinkering with your withholdings. Sometimes people are delighted when they get a big refund, but this means you’re giving the government an interest-free loan all year long. Wouldn’t you rather have your money working for you, earning more in a savings account or share certificate? Simultaneously, if you owe a big sum, you also need to make some adjustments. A tax or financial advisor can guide you accordingly.
2. Review the household budget. Are you living paycheck-to-paycheck? Do you know where your hard-earned funds are going. Look at your monthly spend and see if there are opportunities to cut down spending, or spend smarter.
3. Check the balances on all accounts. Do you have a solid emergency fund in the event you lose a job, or face a big home or car repair? If not, aim to have a minimum of six months of your salary socked away in a special “rainy day” account. Also, assess your balances in your checking, savings and retirement accounts. Ensure these figures are accurate and you’re pacing toward your financial savings goals.
4. Assess your debts. How much do you owe on your home, car, credit cards and student loans. Are you chipping away at your bad debt? Do you have an opportunity to refinance your debt into a lower interest-rate loan? Take inventory and tackle the credit card debt first, as it typically has the highest interest rates. Then move onto the car and finally your home loan. All debt is not necessarily a bad thing. Showing that you steadily make on-time payments on your revolving and fixed loans is great for your credit score, but living debt-free is the ultimate goal.
5. Set financial goals. These could be short- and long-term. Maybe this is the year you want to take a big family trip. How are you going to fund it? Perhaps you’re a decade away from retirement. How are you pacing to ensure you have a good nest egg to last you through the golden years. This might also be the year to upgrade your vehicle. Will you pay cash or take out an auto loan? By looking at your goals, you can plan your finances accordingly and make the best decisions for you and your financial future.
6. Review your insurance policies. Do you have adequate coverage for your home, auto and life? Are you paying the right deductibles, or should you mix things up to maximize your dollars? You might also want to shop around and see if there is a different insurance company to bundle your policies. Take a look and save.
7. Meet with a financial planner. All of the above financial tasks can seem overwhelming, so sometimes it’s best to have an expert take a fresh look at your finances. It’s best to hire someone who is not attached to any financial company and will look at everything with neutrality. This means they are not going to score commission if they sell you a particular policy or fund. Instead, you are solely paying them for their time and expertise.

If the above feels like too much to tackle in just one month, set a schedule for the remainder of the year and plot out when you will tackle each of these financial chores. It all needs to get done, so chip away. Your future self will thank you.