Do Your Year-end Financial Health Check

As 2015 closes, it is a great idea to do financial health check to keep yourself on-track for achieving your life-long goals.

The year is about to end, have you checked your financial health? Keeping abreast of your finances enable you to identify which parts of your spending or saving habits need improvement. You might not realize it, but your debts may be larger than your income. Certain things you do are red flags that may affect your financial future. It is ideal to do a year-end financial health check to overhaul or make minor adjustments to your goals.

Monitor Your Credit Card Spending
Credit card debt may accumulate faster than you think as small and big purchases affect the final bank statement. The interest rates and additional fees that using a credit card incurs might get you in financial trouble. Paying the minimum may provide short-term financial relief, but once you look at the big picture, you might have to pay debt this year, until next year.

The same goes with payday loans, since these are short term loans with relatively higher interest, it is best that you pay them off on time. 

Keep track of your credit card spending to determine how much debt you incur and how you can make adjustments to prevent a high bank statement once the year ends.

A Healthy Balance of Debt and Assets
Debt is not completely bad as it comes in different forms such as a mortgage to help you purchase a home or a car loan. You just need to find the right balance of debt and assets to grow your nest egg and provide you with a flexible financial situation to live comfortably.

If your debt exceeds your income, you may be in trouble. Start paying off debt before spending on luxury items and services. Paying just the minimum is not enough to reduce your debt. The principal combined with the interest rates will eat into your savings and make you worse off.

Instead of spending using your credit card, focus on diversifying your portfolio and investing in stocks, bonds or insurance. Multiple sources of income provide your savings a boost that enables you to live comfortably after retiring. A retirement plan does not start a few years before you leave the workforce; it begins decades before.

Financial Goal Achievements
Did you achieve the financial goal at the start of the year? If your answer is yes, you are in a stable situation. Setting a goal and making decisions daily to achieve it means that you are perceptive with your money. 

Goal setting keeps you focused on what you want to do with your money, and it gives you a reason to budget your expenses and savings. The goal can be as big as owning a house, buying a car, upgrading your work laptop or diversifying your investment portfolio.

Make sure to do a financial health check at the end of the year to determine if you need help or if you are doing all right.