Every six months or so, I used to go to the dentist for a check-up. Since moving out of home to University, the check-ups became less and less frequent – realistically becoming annual check-ups. Unfortunately since graduating and moving to London a couple of years ago I am ashamed to admit I haven’t visited a dentist. This would probably make it almost two years since I have visited a dentist.
Check-Ups are Preventative
A check-up is intended as an exercise to avoid something bad happening. In the example of the dentist, regular appointments ensure that bigger problems can be spotted early. Similar to how men go for prostate examinations and woman get cervical cancer tests – A check-up provides an early indication if things are not going to plan.
Do you see where this is going?!
Having grown up in a world full of check-ups – from tests at school, to drug tests at work – why is it that most people forget one of the most important check-ups of them all? The financial check-up!
5 Reasons to Monitor Your Finances Regularly
- Income < Spending = Trouble – The fundamental reason for monitoring your finances is to ensure that your budgeting and spending is controlled. We all know how easy it is to have too many meals out, buy too many new clothes for the month or lose track of the lattes. Regularly checking your current account ensures that you know where your money is going. Many banks and building societies make this ridiculously easy for you too by providing apps / portals that automatically categorise your spending into genres. Nothing says you are spending too much money on your mobile phone bill more than a giant red area in a pie chart!
- Tracking Goals – We all have goals in one form or another. For a lot of young people, a financial goal is to save up for a deposit to buy their first house. For others it might be a dream holiday, investing for your children’s future or even your own retirement. How can you keep track of progress without regularly assessing your financial position? One thing is for sure – you won’t magically get their by closing your eyes and hoping for the best! It doesn’t work!
- Things Change Quickly – Just because you signed up for the best gas and electricity prices three years ago, it certainly doesn’t mean that you still have a competitive deal. Insurance companies thrive on customers who automatically pay the renewal price without batting an eyelid or trying to negotiate. Companies are at their weakest point shortly after you have served your contracted period; They will do a lot to keep you (or sign you on for another term), yet most people just keep on paying. I regularly contact Sky to ensure that I am receiving the most competitive TV package and 1st central insurance to ensure that I have a competitive car insurance policy. It takes time, but don’t forget that everything can be monitored – Internet, House Insurances, Mobile Phones etc. Also remember, the opposite can also be true – if you are willing to lock yourself in to an expensive contract then be sure to negotiate; just like I did with our Gym.
- Investments Need Nurturing – Whether you are an experienced professional or passive investor, you can’t just ignore your options. Government policies, world trade movements, competitor behavior, economies etc. all have a substantial impact on investments. Just because you bought options in a bluechip multi-national a year ago, it doesn’t mean that it is forever safe. You need to regularly review all your options. For example, P2P lending investments used to be far more appealing than they are today – I won’t be offering any more loans as competition has driven the rates right down.
- Peace of Mind – One might argue the most important thing of all – being safe in the knowledge that you are ‘OK’ if the sh** hits the fan. Ignorance is not bliss when it comes to finances and I shudder when I read stories of people who throw their bills in the bin because it depresses them to read them. One of the key messages in a holistic book that I have just read is all about health being more than a physical thing – rather a complete connection with your surroundings. Unfortunately your financial situation dictates much of this!
After reading back through this post I feel that it is time for a major financial check-up in my household. I have been responsible with the check-ups, but this time my teeth might need to get some work done…
I always try and monitor how we are doing. That’s how we stay on track! 🙂
[email protected] says
HIndsight is 20/20, but prevention takes real guts. Great thoughts.
I like it Mike!
Retirement Investing Today says
I’m lucky in that personal finance is my favoured hobby. My financial check up therefore occurs weekly. That certainly deals with the “Things Change Quickly” problem. 🙂
I also get a little bit obsessive with the checkups! 😉
Free Money Minute says
I like the analogy. Spot the trends early and you can continue to build wealth. I make a regular habit of updating my net worth every month to make sure it is trending up. If it one day starts to head sideways or down, I need to make some choices in order to change trajectory or I will not be in the position I want to be when I am older and can no longer work.
Net worth updates are a great rounded way to track and check-up your finances! I do them too, but privately