Understand your assets and liabilities
Your net worth is determined by the debts and liabilities you own. Assets include cash, savings, stocks, bonds, real estate, retirement accounts and anything else which holds value such as cars or collectibles. Liabilities consist of student loans, mortgage, bills due, auto loans and credit card debt. Consider calculating your net worth annually by adding the value of all your assets and subtracting with total liabilities. This can reveal an overall financial picture.
Assess your goals
At least once a year, review your short term, medium term, and long-term goals. Consider how much are their costs and are you on the right track to meet them. Long-term goals such as retirement traveling may not change year to year, but short-term goals like paying credit card bill and medium-term goals like saving for a house are more susceptible to changes. Decide to re-evaluate such goals every three to six months.
Check your credit report
Your credit report contains relevant information about your credit accounts and payment history. Maintaining a good credit score is vital for availing loans at the best possible rates. The CFPB or Consumer Financial Protection Bureau recommends evaluating your credit report at least once a year to make sure it is up to date and apt.
Name your beneficiaries
Generally, when you open a retirement account or avail an insurance policy, you will be asked to name a beneficiary. The beneficiary is the person who would collect the amount in case of your death. Usually, the spouse is selected as the default beneficiary, but you can assign children or anyone else.
Manage your taxes
It is crucial to set aside enough amount for the payment of the tax bill before the annual deadline, which is generally on April 15. The amount of federal income tax you are required to pay each year depends in part on your tax bracket.
Check if your investments and goals align
Consider quarterly checking your investments whether in retirement plans, tax brokerage accounts or mutual funds in January, April, July, and October to ensure your investment selections are appropriate for your financial targets and age.
Determine if you have the right insurance
At least once a year, it is essential to assess the type and amount of coverage you will require. For example, you should consider renter’s policy, and for home purchases, you should consider homeowner’s insurance. An insurance agent can help guide you in determining whether you have the right type and amount of insurance coverage.