How to conduct a New Year financial health check

We all want to feel that we’re financially sound. We want to make useful decisions and take care of our families and ourselves. To understand your current financial situation, you might be wondering how to conduct a New Year financial health check. A health check will allow you to make smart changes so that you can reach your economic goals.

Your bank might even offer a free health check. For example, Commonwealth Bank offers their customers a free in-branch check that will help them minimise fees, maximise savings, and make the most of their bank accounts. If you’re a customer with NAB, you can take an online assessment to help you improve the management of your personal and super funds.

If you want to conduct a financial health check yourself, there are a few questions you can ask yourself. These questions will give you a full picture of your current financial status so that you can make smart choices in the new year.

Bank account

Consider your monthly bank account balances. Do your balances consistently increase each month? Are they staying the same? Or are they dropping every month?

This is the most basic question you can ask yourself to check your financial health. Our bank accounts can tell us a lot, especially the ones that house our salary. If your bank balances are dropping each month, what can you do to prevent the decreases? It may be as simple as opting to brew a cup of coffee at home rather than picking it up on the way into work.

Investments

Do you feel comfortable with your investments? Are your investments being actively managed?

Our investments are a huge part of our financial health. Because of their importance, you should make sure you’re comfortable with your investment strategy, ensuring that it’s not too safe or too risky. You may also ask yourself whether it’s being managed actively (rather than passively) by either you or your financial adviser.

Emergencies

If you were unable to work for any reason, could you cover your expenses for three months without salary?

When we think of financial health, it’s easy to focus on whether we’re on track to buy a home or retire, but you should also think about the unexpected. If you weren’t able to work, how would you cover expenses? Would you be able to pay your mortgage and other regular costs? Ensuring that you have a plan in place will give both you and your family financial peace of mind.

Retirement

Look at your retirement savings. If you have to fund 20 years of retirement, are you saving an appropriate amount to cover your retirement?

Retirement can sometimes seem like a hypothetical place in a distant future, especially for young people. But saving for your retirement is one of the most crucial parts of your personal finance plan. Consider your current superannuation balance and also check how much money is going into this balance each month. If your current input won’t cover at least 20 years of retirement, you may want to consider adding additional funds.

Now is the time to learn how to conduct a New Year financial health check. Checking your financial health will help you make better decisions and smarter changes in the coming year.

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