How to Assess Your Financial Health and Goals

No doubt when the calendar flips from December 31 to January 1, we’ll all be thrilled to welcome a brand new year! And perhaps more than ever before, this is an important time for each of us to evaluate our financial health before hitting the 2021 refresh button!

Here are some quick and easy ways for you and your family to reflect on just where your finances stand and reset your goals for a bright and successful year ahead:

Reflect: Year-End Financial Review

You can begin by reflecting on how well your finances weathered 2020. It’s always a good idea to keep this exercise judgement-free and as simple as possible. The following numbers are the ones that will really matter to your family:

• A quick net worth calculation.

Add up all your assets (cash savings, retirement savings, home equity, investments, vehicles, etc.) and subtract all your liabilities (such as mortgage, car loans, credit cards, and student loans).

• An analysis of gains and losses from any investments.

Review your starting balance in January 2020 and compare it to your current balance.

• A simple review of your credit report.

Contact one of the three bureaus (Equifax, Experian, and TransUnion) and request a credit report.

• An analysis of your Future Scholar 529 College Savings Plan account(s).

Examine your balances, scheduled payments, and investment plan.

Reset: Financial Goal-Setting Session for 2021

Now comes the fun part: setting goals for the new year! Research shows that setting goals can keep us motivated, boost our self-confidence, and help us maintain control over our own lives.

Use the information you gained from reflecting to decide on your financial plan for the new year. Analyze each component and make incremental changes that can grow your bottom line.

• Decide if you can reduce your liabilities by paying down a high-interest credit card or other debt.
• Set spending and giving goals for each month.
• Determine if you can increase your assets by boosting your contributions to retirement savings or your 529 college savings. Adding even a small amount can get you closer to important long-term goals, like funding a child’s future education.

Make your financial goal-setting as simple as possible to keep it top-of-mind and achievable. You can use S-M-A-R-T, a goal-setting acronym, to help you remember the best way to shape your family’s financial goals.

Your goals should be

• Specific
• Measurable
• Attainable
• Realistic
• Timely

Making your goals SMART will help put you in control of your family’s financial health in 2021. Once you’ve formulated your new goals, write them down! Research indicates that those who write out their goals are 33 percent more likely to achieve them than those who don’t jot them down.

Looking to the Future

You’ll discover that reflecting on your financial situation and resetting your goals can bring you and your family a sense of well-being and greater financial health. So, enjoy the holidays! Rest and relax! And spend some time exploring another R and R – reflecting and resetting – for a successful 2021.