5 Questions for a Realistic Financial Checkup

Ask Yourself These 5 Questions for a Realistic Financial Checkup


Written by John Rothans

May 20, 2020

Few people have been financially coasting through 2020. Even so, many are facing the reality of their current situation and charting a path forward.

As U.S. Money Reserve CEO Angela Roberts observes in her article Learning and Moving Forward, “Nothing has been so dramatically underlined by these past few weeks than the importance of caution and preparation. If the nation truly returns to ‘business as usual,’ then there may be no better opportunity to be prepared for another disaster. The best time to prepare for a turn for the worse is always before it happens—when there is a turn for the better.”

Make sure you’re setting yourself up for a stronger financial future and a “turn for the better” by asking yourself these five questions and adjusting accordingly.

5 Financial Check-Up Questions

1. Do You Have a Financial Plan?

Creating a financial plan can put you on the right course for accomplishing your financial goals. With a financial plan, you can get a good sense of where your finances stand now and where you want your finances to be.

For instance, you might aim to retire early, buy a vacation home, or send your grandchildren to college. A financial plan can guide you toward achieving those goals.

Otherwise, “Failing to plan is planning to fail,” says Alan Lakein, an author who writes about time management.

Components of your financial plan should include:

  • figuring out your net worth
  • setting a household budget
  • tackling debt
  • preparing for retirement

Post-question item to do: Write down your financial goals and work with a trusted advisor to help you create an actionable plan toward achieving them. As Alan Lakein says, “Planning is bringing the future into the present so that you can do something about it now.”

2. Do You Have Enough Savings?

Three in ten U.S. adults have no emergency savings, according to Bankrate’s latest Financial Security Index. One in four has a rainy-day fund, but not enough money to cover three months’ worth of living expenses.

Financial experts typically recommend setting aside an emergency fund that would cover three to six months of living expenses, including your mortgage, grocery bills, and utility bills. You should dip into this fund only when you’re faced with a true emergency, such as a job loss, unexpected hospitalization, or last-minute home repair.

Experian recommends to keep these emergency savings in a high-yield savings account, money market account, or certificate of deposit (CD). To avoid the temptation to spend money from your emergency fund in non-emergency situations, separate this account from other accounts you have.

Post-question item to do: Challenge yourself to save more each month. Every cent counts. Consider this scenario calculated by Fidelity Investments. They determined that a 25-year-old worker earning $40,000 a year who increased her savings rate by just one percent (roughly $33 per month in the first year) could realize an additional $190 per month in savings.

3. How Much Debt Do You Have?

In 2019, the average American carried a personal debt of slightly over $90,000, including credit cards, personal loans, and housing-related debt. Do you know how much debt you have? No matter the amount, your debt could be standing in the way of meeting your financial priorities and goals, particularly if the debt comes with high interest rates.

Paying off your debt enables you to concentrate on financial goals like saving money for retirement.

Post-question item to do: To help reduce your debt, make a list of all of the money you owe and the interest rates associated with each credit card, loan, and other long-term debt. Then come up with a strategy to slash the debt. For instance, you might focus on wiping out the highest-interest debt first, then moving on to the debt with the next-highest interest, and so forth until your debt is eliminated.

4. Are You Saving for Retirement?

Advice about how much money you should put away for retirement varies based on your situation. Generally, though, retirement experts commonly recommend a target of being able to replace 70 percent of your annual pre-retirement income.

If you haven’t set up some sort of retirement fund, it’s not too late to do so (and you’re not alone). “Nearly two thirds of 40-somethings have less than $100,000 in retirement savings, and 28% of those in their sixties have less than $50,000,” a 2020 TD Ameritrade report finds.

Start by talking with a trusted financial adviser about how you can catch up with your retirement needs. For instance, you might want to quickly shift gears and focus on decreasing debt and cutting expenses to free up money to save for retirement.

If you’re already saving for retirement, congratulations. You’re on the road to more financial peace of mind. Remember, though, that you should regularly monitor your retirement allocations to ensure that you’re on the right track. You may need to periodically make an asset adjustment to give yourself a better shot at a comfortable retirement.

Post-question item to do: Double-check your retirement savings. If you’re on a good path, look for ways to make it a great path. If you have room to grow your savings, start simple. Learn more about retirement plans here.

5. Is Your Portfolio Properly Diversified?

Diversifying your portfolio lets you balance risks and returns and potentially help “future-proof” your assets. There’s no clear right or wrong answer about how to properly diversify your portfolio—but there are some rules of thumb. Your age, desired retirement age, net worth, and other factors should dictate your allocations.

When it comes to precious metals, some experts suggest allocating 5% to 10% of your portfolio toward gold and silver. Others put that share as high as 25%.

Gold tends to be the precious-metals star of portfolios. But what kind of gold buyer are you? Find out if you have an aggressive, moderate, or conservative outlook by taking a quiz included in U.S. Money Reserve’s free Gold 101 report. The quiz provides beneficial insights for everyone, from novice gold owners to market experts.

“Silver and gold belong in every balanced portfolio. There’s no magic percentage of silver and gold you should include,” GuruFocus.com advises. “Adjust your position in silver and gold according to your goals, your age, and the size of your savings.”

Post-question item to do: Take action where you need to take action. Financial checkups are just as important as health checkups. Do them both at least once a year. To chat more about precious metals, call U.S. Money Reserve. Experienced Account Executives are standing by to help you learn more about the role precious metals can play in your financial future.


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