How to Perform a Personal Financial Checkup

It's essential to do a "checkup" in all areas of your life from time to time to analyze how you're doing. This way, you can ensure that you're on the right path and make any necessary course corrections to bring you closer to where you want to be.

One significant area is your finances. Your financial health can significantly affect your well-being, happiness, and confidence levels more than you think. Think about how you'd feel if you were piling on more debt than you could earn! As such, evaluating your financial situation at least once a year is crucial to assess where you are currently, where you intend to go, and how best to reach your destination. The benefit of reevaluating our finances every year is that we can re-align our financial goals according to the latest changes to our personal circumstances, ensuring they remain relevant as we go through different life stages.

Follow these tips to conduct a personal financial checkup that provides the peace of mind you deserve:

1.?Determine where you are.?If you don't even do budgeting currently, it's time to start now. It doesn't need to be overly complicated. You simply need to list your monthly income and expenses, and any time you spend money, you record it. Being mindful of your spending habits and how much you have on hand will help you make more sound financial decisions.

• If you already have a habit of budgeting, then it's time to ensure that all your expenses are recorded in the budget and funded appropriately. An up-to-date budget is your roadmap for your financial journey in the months to come.
• The clearer you see your current financial situation, the more motivated you'll be to make the necessary changes to achieve your goals.

2.?Decide where you want to go.?If you have already set your financial goals, evaluate whether those goals are still relevant in light of your current circumstances. Consider what matters most to you, and match your financial goals and budget according to those values. Throw in rewards such as a fun purchase or holiday to boost your motivation.

3.?Review your insurance policies.?As the circumstances of your life evolve, your protection needs may also change. Look through your homeowner's, health, and life insurance, and ensure your coverage fulfills your current needs. It is also worth considering upgrading your disability insurance, such as ElderShield or CareShield, with supplementary plans offered by some of the private insurers in Singapore, especially if you are a breadwinner who provides income that your family depends on.

4.?Create or grow your emergency funds.?The backbone of any financial plan that can offer reassurance is a fund that can pay for unforeseen expenses.?For example, if your air conditioner or car stops working, your emergency funds will ensure that they get taken care of without stressing your finances.

• ?While other households struggle to make ends meet, slipping behind at the first unanticipated expense, you will enjoy peace of mind knowing that you're covered no matter what comes your way. This can only happen if you have a healthy amount of emergency funds.

5.?Create or update your will.?While death is an uncomfortable subject for many, it's important to have your affairs for your loved ones who will be left behind should anything happen to you.

6.?Review your investment portfolio.?How are your investments doing? Are you investing in suitable investment vehicles to grow your money to meet your retirement, child's education, and other goals? Are your investments aligned to your risk appetite, desired rate of return, and the latest market situation?

7.?Reduce your personal income tax.?If you are paying high income tax, you may consider contributing to the Supplementary Retirement Scheme (SRS). SRS enables you to enjoy tax relief while saving for your retirement. Currently, Singaporeans can contribute up to S$15,300 per year towards their SRS accounts, and this contribution can be deducted from their taxable income, thereby allowing them to enjoy tax savings. SRS account funds can be after age 62 for up to 10 years with a 50% tax concession. To open an SRS account, you can visit one of the 3 local banks, namely OCBC, DBS, and UOB.

8.?Think about potential life changes.?Do you anticipate anything significant happening soon? Is your car getting old? Are there any medical expenses for surgery or pregnancy that are coming up? To complete your checkup,?consider upcoming expenses outside your regular budget and plan in advance.?

If you have reviewed all the areas mentioned above, congratulations because you have set yourself up for financial success! However, this is not the end yet. As I mentioned earlier, you must perform a personal financial checkup at least once a year.

Remember, the keys to financial success are awareness, determination to succeed, and the ability to dream big dreams. Your personal financial checkup is the roadmap that will keep you on track.

Lastly, if you are unfamiliar with financial planning, you may consider seeking advice from a professional financial advisor who can help you create a suitable financial plan to secure your future. Whatever it is, DO NOT neglect your financial health.