It is a good time to evaluate how well you have managed your money over the last year and to ensure that you continue to go the correct way when handling your finances. Here are the key steps for a money checkup.

Determine Your Objectives

The first stage in your financial checkup is reviewing your financial objectives. Have you been able to make any headway on them this year? If not, what aspects of your approach need improvement? Do you have any idea why this is? Have you strayed from your original objectives at any point this year? If such is the case, you should edit them and write them down.

Next, consider what fresh financial objectives you want to establish for yourself. For instance, you may wish to contribute the maximum allowed to your workplace 401(k) plan or put an additional $10,000 into your emergency fund. Establish crystal-clear objectives, and then specify the monthly, quarterly, and annual action steps that must be taken to achieve those objectives.

Changes in Personal Situation

Have there been significant shifts in your status over the last year, or do you foresee any such shifts occurring in the future? Significant shifts in income and lifestyle may be brought about by life events such as switching jobs, getting married, having children, retiring, purchasing a home, divorcing, or adding a new member to the family.

You may need to make some adjustments to your expenditures, as well as your budget, your savings, and your assets. If you have a new child, a significant income change, or an expanded family, this may impact how you file your taxes. If you give yourself enough time to prepare for these adjustments, the transition will go much more smoothly.

Protect Your Assets

Your next item on the to-do list for your annual financial checkup is to evaluate the level of safety you provide for your possessions. First, look at your health insurance, vehicle insurance, and homeowner's or renter's insurance policies. Don't overlook the need to purchase long-term disability insurance to safeguard your most valuable asset: your capacity to make a living.

Prepare for Unexpected

You should go through your will and if you have one, your estate strategy. Have any recent developments need an update? If this is the case, you should probably revise your will. Also, go through your life insurance policy to ensure that you have a sufficient amount of coverage to preserve the financial well-being of your loved ones if anything should happen to you.

And if you don't already have life insurance, you should consider acquiring some as soon as possible rather than putting it off until later. Your insurance rates are likely to be more affordable if you are younger and in better health. Talk to a life insurance company representative to see if a term or permanent life insurance coverage would be more appropriate for your circumstances.

Conduct a Performance Analysis of Your Investments

Determine how much money you made from your investments, whether stocks, bonds, or mutual funds. Are you pleased with their performance about the rest of the competition in the market? It could be time to unload the dogs if you think the investment will not recoup its losses.

It's a good idea to harvest whatever tax losses you have before the end of the year. The process of harvesting losses enables you to reduce the impact of capital gains on your investments by offsetting those gains with losses resulting from underperforming assets. Because contributions to a 401(k) or an IRA are already eligible for tax benefits, this tactic is most successful when implemented inside a taxable brokerage account.

Reduce Income Taxes

It would be wise to start preparing for next year's taxes. What steps can you take to reduce their impact? Calculate the total of all the deductions available to you and determine whether or not you may itemize. Examine the list of permitted deductions, and ensure that you make the most of everyone to whom you are entitled. To assist you in reaching the point when you may begin deducting your expenses, you might consider "bunching" your deductions into one year or "accelerating" them by making tax-deductible payments in advance.

Review Retirement Plans

Last but not least, look at how things are going with the money set aside for your retirement. Are you putting away possible money into your 401(k) plan? This is undoubtedly one of the most effective methods of lowering one's tax burden. Is there any retirement plan your business provides if it does not have a 401(k)? If not, you might think about opening an individual retirement account.