An essential aspect of maintaining your physical health can be receiving an annual checkup from your physician. Health and wellness are a high priority for many, and this checkup provides an opportunity to foresee significant problems and receive feedback on how we are doing.
Our financial wellness can be similar. It can be healthy to take a step back, look at previous efforts, and make sure they are still aligned with your current values, goals, and dreams. In addition, it can be an excellent exercise for us to receive feedback. Your financial professional can guide you through these steps and provide additional perspective and planning to help you take control of your financial life.
The following points touch on just a few areas where a financial checkup may help.
Every public company publishes its financial standing quarterly through its balance sheets and income statements. Since we know where they tend to stand financially, wouldn’t it be a good idea for us to check in on that ourselves? Calculating your Net Worth is as simple as using the accounting equation “net worth = assets – liabilities.”. This is an excellent measure to help you understand what you own. Knowing your net worth this year can give you a good measure of where you are and give you a set standard to measure your progress against. Year over year, this practice will allow you to see the progress you’ve been making while working towards your financial goals!
A fundamental piece of our financial plan is our emergency fund savings. It is a foundational piece of security that allows us to build upon it to accomplish greater things. A few questions to ask ourselves in this area may be “Have I adjusted my emergency fund savings upwards due to rising inflation over the past year?” and “Have my base living expenses incorporated into my emergency fund drastically changed over the past year due to life changes such as a marriage or a career change?”
Raises & Bonuses
It can be an event worth celebrating when we receive a bonus or a raise in December after our annual reviews. That said, many people experience “Lifestyle creep” when income goes up, and there is no plan in place. Therefore, it may be a good idea to have a plan in place for at least a portion of raises and bonuses to propel us forward regarding our financial goals and, ultimately, financial freedom.
Personal Insurance Needs
Life insurance needs are typically valued upon several factors: forecasted need and outstanding liabilities. Life moves quickly, and our circumstances can change right under our noses. Life insurance needs can be one important area to ensure we are up to date. With rising inflation, updating our home insurance policies can be another area of importance due to out-of-date “Replacement Costs.” This is a set value that your insurance company promises to pay out if your home needs to be replaced. Whether through home improvements, additions, or just rising costs, updating this policy to a more accurate number can be a great measure to protect yourself.
Partnership Buyout Agreements
In a business situation with a partnership in place, a buyout agreement is a great planning tool to protect both sides in case of death or disability. Many problems can arise if a partner dies and now his half of the business passes to a family member, who may not understand the needs or correct business decisions. Developing one of these early on in a business partnership is an intelligent choice. Unfortunately, this can be placed on a back shelf and collect dust. If you are in a business partnership, it may be an excellent idea to pull this document out and revise and update it because your business may have additional partners. Your practice may have grown considerably. Your business valuation may be drastically different today than your previous valuation. Keeping this document up to date is an essential piece of protecting you and your family.
Rebalancing your Portfolio
A balanced portfolio aligned with your risk tolerance in the market is an essential piece of your financial picture. In 2021, stocks and the market as a whole performed pretty well. It can be tempting to kick back and relax in a market performing well and feel invincible. However, sticking to your asset allocation plan will often require selling some of your best holdings and buying more of your lower-performing ones. Although this seems counter-intuitive, it can be an excellent way to lock in some profit while also practicing the principle of “buy low, sell high.” Rebalancing and sticking to your plan can feel mundane, but it is a simple yet effective way to ensure you sleep just as well in Bear markets as in Bull Markets.
Idaho Medical Association Financial Services Is Here to Help
A personal financial checkup can be a great place to start to get a picture of where you are.
At Idaho Medical Association Financial Services, we have the right processes and people in place to assist people in achieving their financial goals. Our primary focus is helping people move forward from where they are now, reach their financial dreams and goals, and live the life they have always imagined.
Idaho Medical Association Financial Services is among the top financial planning firms in Idaho. At Idaho Medical Association Financial Services, our primary focus is on assisting our clients with their financial plans, like tax planning and investment planning in Idaho. We pair our clients with a dedicated CFP® professional backed by a resourceful and dedicated team.
For Idaho Medical Association Financial Services, we treat each of our clients like they’re part of our family. It’s about serving communities across Idaho and helping them achieve the financial freedom and flexibility they deserve. To learn more and schedule your no-cost consultation, visit our website or call (208)-504-1736.