The Apple-A-Day Plan

Key Takeaways

• An annual checkup helps you stay on track with your financial goals.

• Budgeting is a simple way to control spending and increase savings.

• A retirement portfolio review will help secure your future.

You get annual medical checkups and biannual dental checkups. At work, you receive an annual performance review. Why not give your finances the same kind of "primary care?"

By performing an annual finance checkup, you can assess whether you're following your budget and making the most of your investments. If you've veered off course, you can get back on track to meet your financial, career and life goals.

When should I perform a financial checkup?

In most cases, the beginning of the year is an ideal time to review your financial health. You'll get a head start on tax season and you'll have year-end pay stubs and account statements to work with. It's also a good time to set goals for the year to come.

However, if you're monitoring your retirement fund and approaching your 65th birthday, you may want to review your finances around that date. If you're getting married soon or have a baby on the way, you might want to assess your finances before these major life events.

Although individual needs may vary, your financial checkup should generally include the following components.

Analyze income and expenses

Compare the previous year's after-tax income with expenses. Did you spend more than you earned?

Accounting software allows you to run profit and loss reports for easy income-expense evaluation. With a profit and loss report, you can see how much you spent on basic expenses such as rent and utilities, as well as luxury items including restaurant meals and clothing splurges. Remember, discretionary expenses can easily throw your budget off track.

Next, analyze cash flow for the year to come. Do you anticipate any atypical expenses, such as a new car or a big vacation? Do you plan to retire or take maternity leave next year? If you don't have savings to cover cash flow fluctuations, adjust spending accordingly.

Update your budget

Creating a budget is a great way to keep spending on track and meet your savings goals. If don't have one, you're not alone. Only one in three Americans craft a detailed household budget, according to a 2013 study from Gallup.

If you do use a budget, adjust it annually to account for any changes, such as health insurance, home insurance or income increases.

Compare your various expenses (morning lattes included) to your monthly income. If you discover you have excess income, consider meeting with a financial advisor to determine the best way to put that money to work.

Review retirement savings

Review your IRA, 401(k) and other retirement plan contributions. Are you saving enough? Can you save more?

Aim to contribute at least 15% of your paycheck to your retirement funds. If that sounds like a stretch, save 10%, or as much as you can.

If you're over age 50, take advantage of the "catch-up" contribution. This advantage allows you to contribute up to $6,500 annually — $1,000 more than those under age 50 — to Traditional and Roth IRAs.

Those age 50 an over can contribute a total of $24,500 annually to their 401(k)s. The government raised the contribution limit from $18,000 to $18,500 in 2018, and folks age 50 and up can add a $6,000 catch-up contribution.

As their target retirement date nears, most investors allocate less toward stocks and a higher percentage to lower-risk vehicles such as bonds. Talk to a financial advisor to determine whether your portfolio contains the optimum mix of stocks and bonds for your age and goals.

Review insurance policies

During your annual financial checkup, assess whether you have the right amount of insurance for your life stage.

If you've accumulated considerable assets since purchasing homeowner's insurance, you may want to discuss an upgrade with your insurance agent or broker.

If your children have graduated college or you've paid off your mortgage, you may need less life insurance. If you just had a second child, you may need more.

It's not easy these days to find better health insurance rates, but it's worth the time to review your employer-sponsored plans, individual plans or Medicare Advantage plans before the open enrollment period ends. You may find equal or better coverage at a lower rate, giving you that much more to save — or invest in your skinny vanilla latte fix.

Original Article from Prudential https://www.prudential.com/financial-education/regular-financial-checkup-benefits

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Gracio Garcia is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS) 160 Gould Street, Suite 310, Needham, MA 02494, (781) 449-4402. Securities products/services and advisory services are offered through PAS, a registered broker-dealer and investment advisor. Field Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is an indirect, wholly owned subsidiary of Guardian. The Bulfinch Group is not an affiliate or subsidiary of PAS or Guardian. Life insurance offered through The Bulfinch Group Insurance Agency, LLC, an affiliate of The Bulfinch Group, LLC. The Bulfinch Group, LLC is not licensed to sell insurance.

PAS is a member FINRA, SIPC. 2016-28749. Exp 9/18