If you're like many people, you dread going to the doctor for your annual checkup. These visits sneak up on us and more often than not, we haven't made the changes we told our doctor we would at last year’s appointment.
Financial checkups are no different in many cases. Often, we intend to make changes recommended by our banker and then “life happens.” Unexpected expenses like car repairs, a pet's illness, home maintenance and more can happen at any time. If we aren’t prepared for them, our finances can suffer and our motivation to make change can be delayed until the next year.
In addition to those normal unexpected expenses, many Americans were faced with financial hardship during the COVID-19 pandemic. Many have and still are experiencing job loss and decreases in income, which can lead to the question of, “How do I even pay my bills?”
Over the last 10 years, I have spent countless hours teaching people why an emergency fund is so essential. I will say that many understand the importance of it, but never think an emergency will happen to them. In March, millions of Americans faced the realization that it can, when COVID-19 hit. Not having that emergency fund saved has hurt them and their families financially.
If you haven’t already, perhaps it's time to complete a financial checkup and improve your financial health outcome. Here's how:
Check the temperature
One of the first things they do at the doctor is check our temp and blood pressure. This can give indications for possible future big issues. Let’s do the same and get a picture of our finances as a whole, so we can see what our future diagnosis may look like.
- Log on to your mobile or online banking and get a current snapshot of your accounts. List all current balances of where you stand today. (checking, savings, etc.)
- Write down all your current debts. It’s not always fun to look at our current debts, but it’s essential if we're going to come up with a plan to tackle them. If our goal is to lose weight, imagine how good you feel when you have done so. If your goal is to lose debt weight, imagine how enjoyable that conversation would be when talking to your banker!
- Look at current income. This can be regularly occurring income from your steady paycheck or consistent income from a side job.
Put together a budget…and stick to it!
When we go to the doctor, and they give us something to work on, we need to stick to it to show results. The same holds true with finances. Most individuals understand that a budget is a spending plan, and the goal is to not spend more than you make. While the concept is simple, many people do not follow a budget, because they know they have to hold themselves accountable.
If we do not cut out fast food, it will make our desire to lose weight go by the wayside. If we put off controlling our spending, it makes it much more difficult to hit our short- and long-term goals. Check out one of my previous videos for an in-depth view on making a budget work for you!
Schedule your financial checkup.
Your Old National banker can help you assess your current financial picture, set goals and build a plan to achieve them. Use our online appointment scheduling right now and set up your financial checkup today.
Build that emergency fund!
Now that you've put together a budget, the diagnosis may show that you don’t have a well-funded emergency account. One of the easiest ways to build an emergency fund is to set up an automatic transfer from your paycheck — straight to your savings account. If our goal is to lose weight, our doctor will recommend to take action that day. Building an emergency fund should start right now too!
Commit to meeting with your banker this week! I recommend showing your banker your budget and letting them know what your short and long-term goals are. Your banker may just provide re-assurance that you're on the right track, or they may offer additional assistance. For example, based on the information you share, they can help you in creating a plan to hit that desired savings amount.
For example: Saving $50/week (automatically through your paycheck transfer of course) would give you an extra $2,600 a year!
If you can make it through two paychecks, you most likely won’t even miss the money being transferred. If you can do more, even better! If it’s hard to hit that desired goal, then you may have to work on reducing expenses to make this happen. Remember to always make your goals S.M.A.R.T., meaning they should be Specific, Measurable, Achievable, Relevant and Time-bound. I often provide a Financial SMART Goals Guide to help people with this. And always remember to keep in mind “wants vs. needs.”
I get it. It’s not always fun to admit that we may need to make changes. However, the quicker we act, the faster we will move toward our end goal. Remember that your bankers are here to help you with this. They can be your partner in helping you achieve financial success. Let’s do this! Set a goal, put together a budget and meet with your banker this week!
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