Financial Health Check

Perform A Financial Health Check by Wealth Management Advisor

A financial health check is a like any other check that you perform throughout your life, a doctor’s visit, mechanic visit, etc. Financial health is important to growing financially and setting yourself up for retirement. If you don’t perform one of these regularly or you don’t even know what they are, it is time for that to change. For the good of your finances. The wealth management advisor in New York will help you out.

The term financial health simply refers to the current state of all aspects of your finances, from income, to cash on hand, to investments. A good financial health involves have low debt, and healthy amounts of money/investments. On the other hand, a bad financial health can involve any number of negative situations.

In this section we are going to discuss why performing regular financial health checks is important and how to perform them.

Why Your Financial Health Matters

The reasons that financial health matters are mostly simple ones. Without a good financial status, you will find it hard to live a happy and normal life. You don’t have to make millions but being productive about your finances can make a big difference in how you live your life.

Most of us manage money in some ways. That doesn’t always mean that you are maximizing your productivity with your money. Or being productive at all. Paying attention to financial health will help you to ensure you are doing the most possible with your money.

In simple, financial health is important because it is a check on how your finances are and what to do with them.

Why You Need to Check Your Financial Health Regularly

Financial health changes over time. Even if you don’t do anything to change it. Your life always changes too. When these changes happen, you need to know whether it is for the good of your finances or for the worst. Sometimes it is for both.

Regular financial health checks tell you if there is something that you need to change in your financial life. Sometimes this is getting a new or different job. Other times it is changing your investments around. Or commonly it could be needing to reduce spending.

These checks also serve as a reminder to look at your finances. Some people set their initial financial plans in motion and then never do anything else with their finances. A financial health check is a reminder to keep an eye on everything your money is doing. And if something happens with your money, you will be able to spot it much sooner.

What are the Essential Elements of a Financial Checkup?

When performing a financial check up it is best practice to take a look at all aspects of your finances. Everyone’s financial world is different and you will need to include the factors that are unique to you. But in general there are some essential elements of a financial checkup that you need to include. We are going to cover those now.


The first step in checking your financial health is to review your income. How many streams of primary income do you have? For most of us that would be our full-time job and maybe some income from investments.

Now take your debt and divide it by that income. If the percentage you end up with is greater than 40%, it is time to start considering how else you can earn money. On average you want to shoot for a debt/income ratio of less than 30%. It is even better if you can get it to less than 20%.

If you are looking to buy a house or get a car, you need to make sure you have enough income to seem like a good borrower to lenders.

Don’t forget to also make sure you have enough money left over from paying your debt to handle all of your bills.

For those that find your debt/income ratio is out of control you may want to start looking into alternative plans to getting rid of your debt. This could include getting a new source of income (new job, second job) or getting side income.

Side Income

Many people take out a side job to help pay off debt and bills. If you have a side income that is reliable you can include it in the income calculation above. However, not all side jobs have a constant level of income. For example, business for freelancers might vary from month to month.

If you already have a side income and find that you need to get rid of your debt ratio, then you should consider upping the amount of work you do on the side. That is as long as you can do it without too much stress. Putting stress on your physical health is just as bad as putting stress on your financial health.


Check through all of your investments every time you do a financial health check. Take a look at each investment and see how it performed over the year. Should there be a constant trend of low performance, it is time to evaluate whether or not your current investments are right for you. There are times when you will find that you may have to change your investment plan.

Keeping your investments on track with the rest of your financial plan is also important. You don’t want to find yourself falling behind in one area. However, if at the time of the health check find that you have more income that you could invest, consider doing so.


Whether you made a financial plan in the past or not, most of us have some form of budget put down. Take a look at how your budget worked for you over the last year. Were you able to put money towards your debts? Did you have enough money for food? What about bills and rent?

For those that had enough money in every category and were investing and saving the remaining amount, good job. For the rest, it is time to rethink your budget. Look at how your spending was handled over the last year. Was there any big spending in one area?

Emergency Funds

At the time of your financial health check you should first check your emergency fund to ensure that you have the amount that you planned on having present. If not, what happened? Was there an emergency? Rebuilding your emergency fund should be a priority for those who have used them. It should also be a priority to build it up if you have not already saved enough money.

For those that have saved enough money, you still need to evaluate your emergency fund. With inflation and how your life has changed over the last year, do you still have enough in your emergency funds? It doesn’t hurt to add more to your emergency fund, especially with how unpredictable the world is.


Your savings accounts are meant to compliment your investments, but they don’t typically make as much interest. Do you have the amount you were planning to save over the last year in your account? Good job if you managed to keep up with your savings. Continue to keep up the good work.

Not everyone is able to keep up with their savings. If this is the case for you, it is a good idea to review your income and your financial plan. There is nothing wrong with need to make changes to it. Financial plans are created knowing that changes might be necessary at some point.


Having insurance is an important part of being financially healthy. Health insurance, car insurance, home/renters insurance, etc. You want to be able to protect what you own and protect your money. Review your insurance policies during your financial health check to ensure that they all still cover your needs.

Is your deductible low enough? Are you spending too much? Do you have enough coverage? Is everyone in your house covered? What this all comes down to is that you want to take a comprehensive look at your insurance plans and make sure that there are no gaps.

Your Financial Plan

After all of these steps you should have an idea of how your financial plan is working. Take each aspect of your financial health check and compare it to your financial plan. You may find that one or more of the parts of your financial plan need to be modified.

Modifying your plan is always best done by going through each part of the plan. This helps to ensure that none of your changes contradict other parts of the original plan. It should mesh together into a plan where every part works together.

For most of us we need to update our financial plan at least once in our lives. More often that on many occasions. Life changes effect our financial planning.


Another step of the financial health check is to prepare for your taxes. Taxes and financial health checks go hand in hand as you often have to pull information from each part of your finances for your taxes. As your taxes aren’t due on January 1st, you can still do your financial planning at the start of the new year. Your documents from work and financial institutions sent out at tax season will be helpful.

After you conduct your taxes you will have an idea of how each part of your finances effect your taxes. If you ended up owing money to the IRS, you can use the information from the previous year to come up with a plan to change your finances so that you don’t end up owing money the next year.

Taxes are complicated so this might be a step you want to have someone else brought in on. A tax professional can be a big help. They can also suggest what you can do different the next year so that you don’t owe money the next year. Every person’s situation is different so what might cut down taxes on one person, might not on another.

If you don’t want to pay someone to do your taxes, you can always use a tax website. This will at least simplify a lot of the work so that you don’t have to fill out paper forms and do research into what you need to submit. Most of these websites also offer audit protection to simplify your life if the IRS decides to audit you.

When To Perform A Financial Health Check

One of the best times to perform a financial health check is at the beginning of every year. You can use the information you prepare for your taxes to help you with your analysis and checkup. For some people they choose to perform a financial checkup when they get an annual review and cost of living raise at their job.

Exactly when you pick to perform your financial health check is up to you. What is important is that you conduct the financial health check in the first place.

Financial Health Check Services

Googling financial health check or financial health check services will return a number of companies, websites, and banks that offer financial health check services. Be aware that these services are not as flexible as conducting your own financial health check but for your average person, they may have enough information.

However, you also have to be careful to select a website that conducts a real financial health check and is not just an advertisement for a company or service. Checks like this are not reliable. If you want to use a service to help with your check go with your bank, a wealth management advisor in New York, or a reliable website.

Conducting regular financial health checks is an important part of keeping your financial life stable. One of the best ways to make sure that you conduct one regularly is to put it on your calendar. Set that day, or a couple of days, aside to work solely on your financial health check. Then you know that you will always have time to carry one out.

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