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Give Yourself a Financial Checkup

Give Yourself a Financial CheckupGive Yourself a Financial Checkup

This article was originally written in Sept 2008, but very relevant for today. I enjoyed reading over it again, I hope you do too!

Life is busy. However, even with hectic schedules most of us manage to keep up with the family, home maintenance, exercise, and work. But what about your finances? When was the last time you sat down and gave yourself a financial checkup?

This article will check over various areas of personal finance and guide you along the way. The topics include, cash flow, net worth, insurance, debt, investments, credit scores, cash reserves and estate planning.

Check your cash flow

Open your favorite spreadsheet program (or other money management software). In one column include all of your sources and income and the amount. In another column, calculate all of your expenses including automatic savings and retirement contributions. The difference between the first column and second column should be in the positive territory. If not, review your expenses and cut out the fat. Then look over your income sources and find additional ways to make more money. One of my favorite frugal tips is to write it down.

Check your net worth

Some people don’t believe in using net worth as a metric for personal wealth. As you probably know already, I’m a big fan of the net worth statement. It gives you the “big picture” of where you stand with regards to your financial health. Increasing net worth can be achieved in 3 ways. Reduce debt/liabilities, increase assets, or do both at the same time.

It’s fairly simple to check your net worth. Add all your assets and subtract your liabilities. For an example, you can refer to my net worth updates that I make public. Regularly updating your net worth can help keep you on track to meet your financial goals.

Cash Reserve

Do you have a cash reserve? You should have enough to cover the worst case scenario. Some may believe that having a line of credit is enough. That is fine and dandy for those with good cash flow (see above), but those with limited or no cash flow really should have an emergency fund.

For example, if the worst case scenario is losing your job (with no severance package), then you should have enough cash to pay for expenses while waiting for EI benefits. Or what if you had an insurance claim? Do you have enough cash to cover the deductible?

One prime example of where a cash reserve comes in handy is if you’re self employed. Do you have enough cash to cover expenses when revenues are lower than usual? If I was 100% self employed, I would be socking away cash when money is plentiful as a cushion for when times get rough.

Credit Score

Get your credit report and check your credit score regularly. The biggest reason for this is to make sure that there aren’t any mistakes on your credit report which could pop up at the worst times. For example, during a mortgage application.

Credit reports can be obtained for free, but obtaining your credit score usually has a small fee associated with it. If you currently have spotty credit, check out my article on how to improve your credit score.


Insurance is one of the more overlooked area of personal finance, but it is vital that you have proper insurance to protect your dependents from financial disaster. If your (or your spouses) income is cut off due to death or disability, will your family financially survive?

Start with your term life needs (renewable and convertible) to protect your family in case of death. Then do your research on own occupation disability insurance to protect your main income in the case that you are disabled and unable to perform your job duties.


How are your investments doing this year? Yes, the markets may be down but that’s not a reason to ignore your portfolio. Are you following your strategy? How about your retirement accounts? Have you made your contributions yet?

If you’re invested for the long term with a diversified portfolio, the best advice would be to sit back and relax, the storm will be over soon. In the long run, market volatility is simply a blip on the map. In fact, if you have the discipline, the best time to add to a diversified index portfolio is when the market corrects.


Time to review the dreaded debt on the balance sheet. As I’ve written before, I believe that there is good debt and bad debt. The good being money borrowed for an appreciating asset and is tax deductible. Bad debt is the opposite. This debt is typically credit card debt used to buy depreciating consumer items.

Take the time to prioritize your debt and focus on paying it down one at a time. If we can pay off $50k worth of consumer debt in 3.5 years, anyone can.

Estate Planning

Along with sorting out your insurance as explained above, there are other factors of estate planning that need to be accounted for. Do you have a will? Do you know how you will pass your house/cottage or portfolio onto your children with minimal taxes? Or how you want your assets split between children? Did you know that if you don’t have a will that the courts decide how your assets are divided?

Contact a lawyer that specializes in estate planning and get your affairs in order. From my research, a will should cost around $400. Check out a previous article on the basics of wills and estate planning for more detailed information.

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