Financial planning can prepare you for life events, such as buying a house or getting married, as well as everyday expenses and budgeting. To stay on track, it’s a good financial practice to have regular check-ins. This guide can help you get more comfortable managing your money and keeping yourself on track.
Tip: To avoid getting overwhelmed, don’t plan to take on all of these at once. Consider spreading them across separate check-ins, maybe two or even four times a year.
1. Assess your current financial status
First, the big picture. Review your income, expenses and investments to identify any changes you want to make. The first time you do this, it might feel daunting — but over time and with consistent check-ins, it won’t be such a big task. The goal here is to get an aggregate view of the funds coming in and the funds going out, including investments.
Take quiz: Which investment accounts are right for you?
2. Prioritize your financial goals
With your updated financial status in mind, set new goals or determine whether your current goals are still valid. For instance, maybe last year you decided to pay off your car loan. If you’ve since paid it off, those funds can be redirected to a new goal. Or maybe you have made significant progress toward building your emergency fund, and you don’t need to direct quite as much toward that goal.
This is your chance to check progress toward each goal and decide whether your financial strategy is still aligned. Again, the first time you do this, you might feel like it’s a long exercise, but as you check in regularly, you likely won’t need to spend as much time on each item.
Read more: How to set financial goals
Consider spreading these items across separate check-ins, maybe two or even four times a year.
3. Realign your budget
Similar to goal-setting, when you make a budget, you’ll want to account for upcoming life changes, like growing your family (say hello to monthly daycare costs), and your long-term goals (like saving for retirement). Play around with how you’re allocating funds until you find the right coverage for both your monthly expenses and your most important savings or debt repayment goals.
Read more: How to use buckets in your Ally Bank Spending Account for everyday money management
4. Check on your emergency fund
Having an emergency fund can help you avoid the stress of any unexpected financial events. If you’ve already built one, check that it’s still on track. If you’re nearing your goal, consider where you’ll redirect that money next.
Read more: Emergency fund full? Here’s what you can consider next
If a rainy day fund is on your list of goals, calculate how much to save for emergencies by determining your timeframe. The general guidance is to save three to six months of living expenses.
5. Manage your debt repayment strategy
This is a good time to check how you’re doing on debt management. Make a list of your debts, their interest rates and your progress toward repayment for each one.
If you haven’t set up a repayment plan yet, there are many methods you can employ, depending on how you want to prioritize payments.
Take quiz: Which debt repayment strategy is right for you?
6. Check your credit report
Ally Bank customers can access their credit scores for free. Additionally, you could also request free credit reports from the three major credit bureaus (Equifax, Experian and TransUnion). Review all your lines of credit, so you can quickly address errors, discrepancies or other issues that may negatively impact your score. Maintaining a good credit score can help you reap financial benefits in the long run like more affordable insurance premiums and lower credit card interest rates.
7. Review your investments
If you’re investing toward retirement, check in on how you're progressing toward that goal. Consider setting up an Ally Invest Individual Retirement Account (IRA) and, if available to you, consider contributing to your 401(k), so you can take advantage of any matching contributions your employer may offer.
As you pay back debts or if you receive a raise at work, consider putting excess funds toward your retirement. Depending on your timeline, retirement can feel like a long way off — making it easy to put off — but if it’s an important goal for you, it’s vital to keep a consistent eye on its progress.
Monitor and adjust your financial plan regularly
Life circumstances change all the time, and conducting regular financial check-ins can help you stay agile. You might be surprised by how much more confident you feel when you’re in tune with where your money is going and how you’re working toward each of your goals.
