A Financial Check-up

If you’re smart, you get an annual check-up to make sure you blood pressure and cholesterol are in line and that you’re healthy. Take the same approach to dealing with your money and you can quickly right whatever has gone off kilter before you have to amputate whole categories from your spending.

1. Is your net worth growing?

Net worth is one of the best barometers for measuring financial health. Subtract what you owe from what you own. Your net worth will improve if you are paying down debts, adding assets, or both. If your net worth has dropped because a particular asset class – like your home – has fallen in value, don’t panic. But if your debts are increasing while your assets are not, you’re headed for trouble. (Under “Resources” you’ll find an online net-worth statement you can use and print.)

2. Are you spending more than you earn?

If you don’t know the answer to this question  — or you’re guessing — because you aren’t tracking your spending, it’s time to grow up. You work hard for your money honey, and you should spend some time looking after it. That means knowing where every red cent goes. While tracking your spending may be a tough habit to establish, it’ll pay in spades when it comes time to review your spending and see if you’re putting your money to the best use. It only takes minutes a day. If you think you can’t find the time, it’s because you can’t find the motivation. Kick yourself!

3. Has anything changed in your life in the last year?

Getting married is a big deal. So is having kids, changing jobs, becoming unemployed or getting sick. Retirement’s a biggie too. If you haven’t adjusted your financial plan to reflect the changes in your life, now’s the time to do it.  It’s easy to let the plan slide when you’re focused on “more important things.” But that excuse only holds water for about a month. More than that and you’re hoping your plan won’t change. Hey, there’s no profit in “hoping.” Figure out a new plan and keep your financial life on track.

4. Is your insurance still enough?

Any major life changes brings a need to evaluate whether you’ve got enough insurance. From home insurance to car insurance, from life insurance to disability and critical illness, you should so an annual review. If raising your deductibles would lower your premiums, up your emergency fund to cover the higher deductibles and get busy saving some money.

5. Does your estate plan need tweaking?

If you’ve had a will and powers of attorney professionally executed (so no Will Kits, please), you’ll just need to do a quick review to see that everything is still ticketyboo. If you’ve had major life changes, like a divorce or widowhood, then a full-on review and rewrite may be necessary. Don’t ignore this because it’s yucky. It’s important.

6. Are you happy?

At its core, financial planning isn’t just about the money. It’s about what you’re doing with the money. If you’re not happy, you’re doing something wrong. Whether you want to spend more time with your children or wish you could travel more, this is the perfect time to look at your goals and revamp your plan to meet them.

24 Responses to “A Financial Check-up”

  1. Such a great checklist!! Prompted me to move from years of lurking to offer heartfelt thanks for the work you do, Gail. There are many more like me who read and nod but don’t give back the affirmation. Your expertise and well rounded advice and recommendations has made a difference for me in many quarters. I’m continually surprised. It’s important not to be complacent. At age 60, my situation is exceptionally secure but tweaking can always be done. Your advice in August 2009 about seeking out a geriatric care manager came at a critical time when I was taking care of my Dad with Alzheimers. Brings me to tears to think of the difference that made for everyone. So kudos and hugs and all the best of the season to you and yours.

  2. My husband has been working ridiculous hours but the paycheques have been very decent. I’ve been dealing with the finances while he’s gone; he has no time to spend money or go to the bank, other than to deposit his cheques. He has noticed that our account hasn’t been growing much despite his hard work. I’ve told him that we’ve increased our net worth by $16 000 in a very short time frame, by paying off most of his loan and putting money into RESPs for the kids. While he’s been making more money, I’ve actually been spending less, on groceries, satellite, and daily things. By March, we should be entirely debt free and really be able to accumulate savings, extra hours or not. Sometimes it’s hard to get him to see the big picture. His big picture right now is having enough money to buy a big picture (large screen tv) which is silly because he won’t be home to watch it.

  3. This is a great check up list to review a few times a year.
    Mt spending and savings are areas I put a lot of attention on. This reminds me that I should calculate and track my net worth more often. I have done some estimates but it is time to get accurate numbers.
    Reviewing insurance is also very important and is something I’m currently reviewing. I have lowered my car and house insurance payments by moving to a better insurance company. My next phase is making sure I have adequate insurance for everything not included in these policies.

  4. Great checklist. I have more than enough insurance coverage, am paying down my debts (student loan and car), and I am finally going to pay off my pesky overdraft that I have been ignoring. It will be paid off (and eliminated!) December 18th and I can’t wait. Emergency fund is growing, savings, rrsp, resp….growing. I have done and redone my budget for my upcoming return to work from mat leave and I have budgeted the most expensive daycare fees we are looking at (and hoping for the cheaper rate 😉 I have my spending journal ready to go starting jan 1 and look forward to having a more detailed account for money spent (namely what exactly we bought instead of just where we bought items from). Here’s to an organized 2013!!

  5. That’s a good checklist to go through with my Hubby over the holidays. And I love that you’ve included #6 about whether or not we’re happy. I think I’ll be looking over my non-financial goals to make sure that’s what we are.

  6. Cas, I recommend that you at least start another savings account/ even just a jar with change for your husband’s “TV Fund” and let him watch it grow. If he is working so hard, he deserves a reward… be very very careful of burn out. I think by voicing his thoughts now about not seeing results, he is starting on that path. Just because he won’t watch it much it doesn’t mean that it won’t mean a lot to him every time he passes by the TV and can look forward to the weekend…or watching sports with the kids (if you have any) or watching movies with you… Psychologically, it will help for him to see that account grow and be an incentive to maintain the good job he is doing for the family. We are only human and we need visual reminders sometimes of a small luxury to remind us of why we slave away on the daily grind. I’m a working mom… I don’t have a tv fund myself (although we should probably start one), but my “luxury” that I am saving for is a new set of “kitchen cabinets” and it’s such a reward to watch that jar grow even by pennies. I draw on that feeling when I have rough days.

  7. @ Grace: I appreciate what you’re saying, but he’s not living at home for a bit. And the money is there to buy a tv, I just think we should hold off. All money I’ve “invested” has been done with prior discussions with him, and he knows its best, but it’s hard to not feel any richer, though we are.
    Burn out? Imminent I think. But little I can do for that, except to continue to bank and save so we have peace of mind if he needs to be off for a while.

  8. I think you are right, Grace. Visual reminders of progress are very helpful.

    My boyfriend is very concerned about saving for long term goals, but it helps to have a few short-term ones as well.

    When I finally paid off my student loan, I thought my quality of life would improve, but it hasn’t really. We are saving, but have nothing much to show for it.

    Sometimes I feel like we’re not getting anywhere, and what’s the point of saving if we can’t enjoy our money a little.

    I know he wants to buy a house one day, and he wants to save for retirement, but there is no clear plan or timeline on it. So, I feel like I’m just spinning my wheels.

    Saving up for some sort of short-term item, like a vacation or a new piece of furniture, in addition to the long-term savings, would help me a lot (psychologically) to keep going.

    Small indulgences are just as good as big ones, in my mind. He doesn’t seem to need this, to motivate himself to save, but I do 🙂

  9. And I should add that it will not “just” be a big screen tv. Because there’s the $1400 stand he’d want to go with it (drooled over it this spring), plus new furniture, as it won’t work with our current furniture arrangement, a surround sound system… If you give a mouse a cookie… 😉

  10. #6 Absolutely yes since the other 5 items have been taken care of on a rolling basis.

    Feels great to not worry. Feels great to feel in control in case worries need to be dealt with.

  11. Thanks for the reminder. There needs to be a little tweaking with our wills, but everything else is good. We’ve already talked about next year’s money. Instead of going to Nova Scotia, it’s clean up our house and yard and finish off jobs that, yes, we probably have the materials for already. I have a list of our movies alphabetically on the shelf and on the computer (I’m a little weird that way) and I told my husband that we were going to start watching them starting with the letter “A”. If we watch one moview a week, it’s still going to take us a couple of years. We really want to have a no-spend on foolish stuff year.

  12. I finally re-did my will! Seemed to take months to get everything organized, but it’s a big weight off my shoulders.

  13. Gail, this blog is so timely. I received your new book ” Money Rules’ in the post today (to add to my Gail collection)! Can’t wait to dig in!!!

    I agree with Sandra. Thank you for all you do. You no-nonsense approach is just the kick in the behind I needed a few years ago. Thanks to your advice, I have a healthly savings account, a good start on an emergency fund, have brought my debt down considerably (8 more months to debt free!!) and have also started a down payment saving account for a new house.

    So, when are you running for Prime Minster again?? What about Govenor of the Bank of Canada?? 🙂 It would be great to have someone like you do what you do on a much bigger scale to get our country’s finances in order!

  14. Hi Gail,
    This one will strike you a little differently. How about the question to #6 that you’re NOT happy because you save so much (like 20% of take-home) and refuse to spend anything other than essentials. Closing in on my 40s I’m paranoid that I won’t have enough for retirement so I’m in financial lock down – don’t spend one penny more than is essential. It causes strife in the relationship.

  15. Hi Gail,

    I have been a lurker for quite a while now, and this is the first time I’ve posted. Granted, I have no debt and I have saved a little ($1,600 this year), but I feel I need to do more. I have one bad vice and that is I gamble. People who post on here, kick me in the behind. I do go for fun, but lately it hasn’t been so. I am now going out of depression because my boyfriend passed away early December. Mind you, I have been gambling a long time, but it never got to the point where I didn’t have my nest egg tucked away and not on the bank machine.

    Gail, I love your shows and watch them over and over (I have taped them). In January I plan to do what you tell us to do. Track your spending. I can’t do it right now because of Christmas and the spending, but definitely going to change things and start writing it all down. You are definitely an inspiration, and I look forward to your new show coming up. I’m also going to get your latest book (I have the others and I love to read them and gain insight.

    Have a wonderful Christmas Gail, and I look forward to seeing more great articles on your blog.

  16. Thanks Gail. We have it all in order and no debt except a small mortgage and a car loan. I sometimes feel like we don’t have enough fun. We have always saved and lived below our means and made many sacrifices along the way. We are mid 40’s and our plan now is to try to enjoy life a bit more now that we can.

  17. @Bill A budget doesn’t have to be just about spending less. It tells you what you can spend while still being financially responsible. Do some analysis to see what you actually need to be saving for retirement, put that amount aside in your budget, and then you know you can spend the rest because you’ve got your bases covered.

  18. Here’s the reply that Gail sent me in 2008 for the very same situation: (change gender to suit…and thanks for reminding me – I needed to re-read this…)

    This is most certainly my bailiwick because I deal with financial oddities of all types. You need to start taking pleasure in the money you have and the things you can do with it. First, try to spend money on someone else that brings you pleasure. Take your Mom for lunch. Buy your sweetie a CD he’s been hankering for. Offer a complete stranger the quarter for the cart at the grocery store. Start small and work up.

    Okay, what do you like to do? If you have a hobby or interest, buy yourself something that helps you experience your hobby or interest. So if you like movies, take a girlfriend to a movie. If you like music, buy tickets to a concert and take one of your siblings along, The idea is to focus on the experience, not the money. The only reason money exists is to meet our needs and our wants.

    Now it’s time to buy yourself something. Pick a thing. A new pair of shoes. A new dress. Candles for the house. Okay, decide that today you’re going to go out and buy it… Whatever IT is. Put the money you plan to use in an envelope and head to the stores. Take a girlfriend along so she can laugh at you as you struggle to put down your $20. Hey, it’s funny! You’re a miser and you’ve got to get a sense of humour about it. Here’s the kicker: If you can’t bring yourself to spend the money, your girlfriend takes the envelope and hands YOUR money to the next person she sees. One way or another, you’re going home without that money.

    Don’t expect to overcome this overnight. And don’t, for heaven’s sake, fall in love with spending and turn into the Spending Monster. Just ease your way into appreciating the experiences and things money can buy, and the pleasure you can derive from those experiences and things. Good luck. Let me know how you’re doing. g

  19. @ Bill – I was like you too but have learned to relax a bit. Life is for the living, so check me tommorow as they say. I’ve realized that people really do start dropping dead in their 30s and 40s, so it’s good to balance tommorow’s needs with today’s wants.

  20. […] This week Gail Vaz-Oxlade showed you how to perform A Financial Check-Up. […]

  21. […] This week Gail Vaz-Oxlade showed you how to perform A Financial Check-Up. […]

  22. @Geoff @Eunice
    Thanks for your suggestions…I’ve tried to ease up a little bit…we did a movie (just the tickets mind you)…things are a little better but it’s not going to happen overnight.
    I realized that I didn’t include my company stock and pension in my “savings” category so it’s another 10% saved on top of the 20% I have been putting away – so in actual fact I’m saving the equivalent of ~30% of my take-home.


  23. I neede a financial check up desperately – Here is my story :

    I left Canada in 1991 and went to the gulf hoping to save taxes and come back to Canada and buy a house with cash! Well it almost happened – I stayed in the gulf for 15 years – I built an IT Company employing more than 100 people and at one time, I had more than 1 million dollars in cash sitting in the bank.

    Then I became wise and I invested those 1 million in the property market in the gulf – I lost all of it including my property which was worth another million dollar. I left the gulf and came back penniless in March 2010. Even the CBS guy asked me “Are you really coming back after 15 years and I laughed and I said YES” – little did he know that my pockets were empty.

    I started all over again with 50K in my RRSP which I had left behind (thank god)… I started withdrawing but having used to the luxury life of the gulf (drivers, maids, multiple cars) I soon finished the 50K and was in debt! It took me seven months before I landed a job again (90K Salary) in spite of having worked in Canada for 10 continuous years with a fortune 500 company… Somehow I forgot what a budget was :). I leased a brand new Honda civic costing me 350 Plus 200 insurance! – Crazy world. I started missing payments on credit cards etc. and it dawned upon me that if I do not do anything about this situation, I will end up on the streets!

    So I got rid of the lease car, bought an old Camry for 3,500$ cash and started controlling my payments. The landlord decided to sell his house, so I had to look for another place. Somehow, I ended up buying a town house with the cash back that I got from the bank as my down payment plus 5K that I had saved i.e. with 25K down payment. Things were now looking bright… I had a proper budget drawn up that I was following through diligently. I stopped putting anything on my credit cards. It was pure debit card only nothing else – I surprssed my desire to buy anything other than the basic necessity clothes for my two kids and Mrs and groceries!.

    Exactly six months after I started the job, I got let go with 3 months compensation – I was devastated! A mortgage to pay, credit cards to pay etc… My friends told me welcome back to Canada…

    This time around, I pulled all my resources possible and in exactly 2.5 months I landed a good job (130K compensation)… I am still here (one of the top four banks…). I re-did all my calculations, and I estimated that I need to be exactly 2 years with the new company and the bonus etc. and I should have absolutely no debts except the mortgage. Well November 11th was exactly one year since I joined the company and on 31st December 2012 having worked very hard, I was given a distinguish performance and was compensated with 32K in equity (gets vested in 3 years) and 30K cash (40% the government took 🙁 ). I took the entire cash bonus and paid off the debts… I am now left with 3K of debts on one of my credit card and 600$ on the rest total 3600$. I can sleep to some extent…


  24. Gail, you are an answer to our prayers. My husband and I are making
    huge leaps to become financially sound. By having the tools to review
    our net worth and make adjustments, we will be one step closer to being
    debt free and having our house paid off ahead of schedule. For years, I
    looked for a way to get organized financially and get control of our
    spending. Thanks for sharing your wisdom and helping to bring financial
    peace to so many households.

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