Nine Key Financial Steps That Procrastinators Miss

October 17, 2011

Yesterday I went to get a mammogram; the annual “boob smashing” is what I call it. The process isn’t fun so for any of you who haven’t had one, a mammogram basically consists of smashing your breast between two plates painfully stretching your skin along the way, then you are left standing there while the technician walks away. She ducks behind a machine that reminds me of the wizard of oz behind the curtain. She then tells you not to breathe (oh sure, relax!!) and hold perfectly still, all the while you are held captive in a strange kind of vice. If that isn’t enough, they do it again from a different angle and on the other side.

What would make me voluntarily sign up for this and then walk in the door of my doctor’s office of my own accord? Well, I know that I need to do it, but truthfully, because my doctor reminded me and his office called me to follow up. I seriously might have put it off otherwise, eventually getting it done. To be safe, I follow my doctor’s orders and get screened.

The follow up phone call from the doctor’s office was the turning point for me to get the check-up. When I was walking out, it occurred to me that no one is calling you to do an annual financial check-up unless you have a financial planner. Even then, sometimes that call may just get ignored or put off. Reviewing your finances annually may not be a life or death situation like early detection of cancer, but it is certainly a vital “lifestyle situation.” Early detection of an inadequate savings rate, as well as having improper investments for your risk tolerance, could actually preventyou from being able to retire before you are 70 years old!

If you work with a financial planner, make sure to schedule a comprehensive review each year. If you are a do-it-yourself investor, set aside time now to review your finances. Fall is a great time of year – before the holidays hit and while you still have some time to take actions that will affect the current year. Since no one is calling you, send yourself a reminder. I just got an app for my iPad called “Occasions” where I enter my family and friends’ special days, such as their birthdays and anniversaries, and a pop- up reminder appears two weeks ahead of time giving me enough time to get a gift or card in the mail. I am going to adapt it and add myself to the list with a “Financial Review” reminder for October and another one in May.

Here are some suggested items to add to your list for the review:

Find out where you stand this year with a net worth statement. This allows you to compare year over year and analyze where your strengths and weakness are.
Review your risk tolerance which may change over time or with circumstances.
Review your investments to make sure they are in line with your risk tolerance.
Update your records if you have had changes in circumstances. If you have moved, make sure you have changed the address on all of your investment statements. If you’ve gotten married or divorced, or had a child, be sure to update the beneficiaries on all of your investment accounts. This is a very common error that I have made myself.
Check your credit history. Order a free credit report from www.annualcreditreport.com and also consider signing up for a credit reporting service to help prevent identity theft.
Review your estate planning documents, such as your will, trust and powers of attorney. If you have a safe deposit box, locate the key and make sure you have your representatives down as signers.
Do a tax planning assessment.
Review your budget to see where you might be over spending and find places to save.
Review your debt – balances and interest rates and develop a debt elimination plan.

Hopefully your financial review will be much less painful and awkward than a mammogram – how could it not be? But either way, it will be just as rewarding when you either uncover important things you are missing or can give yourself a clean bill of financial health.