Whether you are sick or not, it is wise to go to the doctor. The doctor is able to tell you what ails you even when aren’t feeling anything bad. It is a good way to catch any possible diseases before they become too much of a problem. Early treatment after all is better than letting it get worse.
Prevent Financial Illness
The same can be said about your finances. You can do much better for yourself if you are able to catch any possible financial ailment before it becomes a disaster.
To start with, you must analyze your expenses. Tabulate your latest expenses, say for about the last three months. List everything, from your electrical bills, restaurant spending and other expenses.
By doing a list, you will discover the Fixed Expenses and the Variable Expenses. You will see how you are spending all your money by examining all your expenses.
The amount of money that comes in every month should be watched as diligently. This is a good way to assess if you are spending more than you are making. If this is so, you need to either make more money or spend less. Otherwise, you can be bankrupt in a matter of months.
The next thing you need to do is establish your financial goals. Where do you want to be after five years, ten years and more? Now that you know how much you are making, it is easier to figure out how you can reach those goals.
When you are doing a financial checkup, you also need to check out how protected you are. Aside from your dreams, you also need to protect your present and that means everyone currently important to you. Assess your insurance situation. If anything happens to you, what happens to them?
Your future is important and your financial check up should also look into this a little bit deeper. Check your portfolio if it is properly allocated. This should be done regularly around five years apart while you are still working and one year apart when you are nearing retirement.