Business owners and finance professionals often talk about their "fiscal year"—the specific 12-month timeframe companies use to track their financial health. Now that the new year is before us, it's time to look back at your own fiscal year and get ready to start fresh. A year-end review is the perfect way to make sure you are on the right financial track. Not sure where to start? Check in on your bills, debt, savings, insurance coverage, and beneficiaries first.
Bills: Do you pay on time?
Be honest with yourself: Have you been paying your bills on time, every time? If you've been struggling to make your payments, consider a new system. Create calendar reminders on your phone or schedule a consistent weekly time to review your bills and make payments.
Debt: Are you working toward financial freedom?
Where are you on the path to paying off your debt? Have you stopped spending more than you earn? This is an area that requires brutal honesty. If you can trim your budget and pay off your credit cards faster, commit to that. If you are concerned about student loan debt, now is the time to look into government repayment options. If you can't afford monthly student loan payments, check income-driven repayment plans.
Savings: Plan for your future
Have you set aside money for emergencies and retirement this year? If you did set money aside, is it enough? Now is a perfect time to estimate how much you need in case of an emergency and in retirement. Figure out what you need, and then see if you are dedicating enough money each month to reach your goals.
Insurance: Are your assets covered?
Review your insurance coverage and think about whether it's time for an update. No one likes paying insurance premiums, but it can be much more expensive to pay for a new car if yours is totaled and you aren't properly covered. If you rent or own your home, make sure your insurance policy will replace your belongings in the event of a natural disaster. You might be surprised at how expensive it would be to replace your laptop, TV, and furniture.
Beneficiaries: Are you prepared for the worst-case scenario?
Even though you're young, you should still make sure you have designated beneficiaries who would inherit your assets should the unthinkable happen. If you're unmarried without children, you might make your parents or another family member your beneficiary. If you do have a life partner, s/he should be your beneficiary. Make sure you review your accounts regularly, each year, as major life changes should mean a change to your beneficiaries. If you get divorced, for example, you probably don't want your ex to receive your retirement account payout.
Looking at where you stand at the end of your fiscal year can help you identify what you did well and acknowledge where you can improve. Tweak the process a bit and you'll be ready to crush the new year.