In the same way our cars need an oil change every 5,000-10,000 miles, your financial portfolio’s health will most likely benefit from regular checkups too. Financial adviser Deborah Zelada offers her version of a personal financial checkup list — follow it and it may help you make the most out of your finances.

Create a Budget

Typically, the first step in getting in touch with your financial health is creating a budget. And if you already have one, it might be important to revise it after you’ve experienced a raise at work, a career change or have taken on new expenses. “People accomplish this in a variety of ways. Some use the envelope method, where you take cash out of the bank when you get paid and put in envelopes for a variety of expenses: rent, entertainment, eating out, vacations, etc.,” says Zelada. “Once the money is gone for that cycle, you need to figure out ways to adjust for the remainder of the period.” Getting a hang of budgeting often doesn’t happen overnight, but once you get into the swing of things, it can be a great way to maintain financial self-care.

Comb Through Your Monthly Expenses

“Look at your monthly bank statements and analyze your spending habits, separating the necessary expenses from the unnecessary,” says Zelada. “Put all the unnecessary expenses on a list and you will quickly realize what needs to be adjusted.”

Zelada stresses that people can sometimes get into spending habits not because they’re essential, but because they’re routine or convenient. Five-dollar coffees and $20 manicures might feel good in the short term, but it can be important to make sure all our purchases are in line with our long-term goals. That doesn’t mean you need to skip your morning lattes, but maybe that you want to make them at home half the time. By knowing what’s going in and out with your finances each month, you can start to make more informed purchases.

 

Start Saving

Once you identify your unnecessary spending habits, you might want to add that number up and start allocating the dollar amount toward your savings. “Routinely allocating money into your savings account is an easy way to save up for big financial goals,” says Zelada.

A savings account can also be a good way to build up a nest egg to pay off credit cards, support yourself in case of an unexpected life event or take a well-earned vacation. Zelada recommends putting away about 20 percent of your paycheck toward a saving account. Eventually, you’ll want to have three to six months of your monthly income in your savings. When you buy that ticket to Bermuda, you probably won’t miss those lattes!

Another way to add to your savings is by smartly using those windfalls of cash that sometimes come our way. Zelada suggests avoiding the allure of spending large influxes of money — think bonuses and tax returns — on designer clothes and fancy gadgets, and instead paying down your credit cards or other bigger bills. “When you prioritize your larger, more important expenses, you ensure yourself a healthy financial lifestyle,” she says.

Check Up on Your Credit Cards

Credit cards can play an essential role in making sure you have healthy financial habits. “You should do routine maintenance of your credit cards every six months,” says Zelada. “It can be a good idea to keep what you owe to less than 30-percent of your credit limit.”

The Balance agrees with Zelada, suggesting that, generally, a good credit utilization ratio is less than 30-percent. Zelada also recommends prioritizing paying more than your monthly minimum to make sure you get closer to that number. Also, it can be important to keep a keen eye on your credit score. According to Zelada, a good credit score, in conjunction with keeping your balance low, can help build credit for future larger investments, like buying a car or a home. If you find that your credit spending is less than satisfactory, Zelada recommends seeking out a professional either through a private company or at your bank to help fix your credit score. “What people don’t know is that oftentimes, your credit score contains issues that are easily resolved once you talk to a professional,” says Zelada.

Think About Retirement

“For me, retirement is my most important financial goal,” says Zelada. “I always make sure to contribute to my 401K. It’s pre-tax money and the best way to save for my future.” Retirement is about having a good quality of life when you no longer work. Prioritizing a small amount of your income (or as much as you can afford) to contribute to either a 401K or a savings account in the name of retirement can be a good idea.

Money can sometimes feel like an overwhelming, abstract idea. Routine financial checkups can keep you grounded and on track with your goals. Taking these steps on a regular basis can also help you re-evaluate what’s important and, in turn, live the life you want. Now, go out there and get it! (Well, right after you finish the checklist!)

 

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.