How to achieve your financial goals : Life Kit Just like your health, your finances need checkups too. Here are 5 good habits to do every year to help you reach your financial goals.

Get a better handle on your money with a financial self-care routine

Get a better handle on your money with a financial self-care routine

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Colorful silhouette of a man nurturing green financial investments and revenue streams, symbolized by a bar chart and a watering can.
We Are/Getty Images; NPR

There are things we're supposed to do routinely for our health — brush our teeth, shower and exercise.

There are basic hygiene tasks to maintain or boost your financial health too — actions you can take annually to make sure you're on track to meet your goals.

Think of this routine as a quick checkup for your finances. Life Kit has more suggestions for handling your finances, but here are five good habits to get into every year –– no appointment necessary.

Look to the future

Ask yourself where you want to be three, five or ten years from now. Brent Weiss, a certified financial planner at Facet, asks his clients this question when helping them devise their financial goals. And then he asks: "What has to happen in your life for you to look back and say, 'That was a wildly successful period of my life?' But here's the trick. You can't mention money."

That's because money is a means to an end, and figuring out your life goals first will help you realize what you need financially to make them happen. For example, maybe you want to move to another country or start a business. Weiss says your financial goals should get you closer to whatever you want.

Check in on your investments

Once a year, check in on your investment accounts, like 401(k)s, Roth IRAs and brokerage accounts.

If you have a 401(k), see what you're contributing per month or paycheck. Maybe you've gotten a raise since you set up the plan; consider increasing your contributions.

Generally, when checking your investments, you'll want to pay attention to fees. You'll find those listed for individual funds under the term "expense ratio."

"The lower the expense ratios, that's less fees," says Rita Soledad Fernandez Paulino, the CEO of Wealth Para Todos. When you can, Fernandez Paulino says invest in funds with lower expense ratios.

Whatever sort of investment account you have, you'll want to look at how much money you're earning on your investments – also known as your rate of return. You can find your rate of return on your account statement or through the online portal for your brokerage firm.

"Ideally, you're going to earn at least 10% average over ten years," says Fernandez Paulino. "There are going to be years where your rate of return is going to be really high, 21%, and there are going to be years that it's low."

If your rate of return is low, don't panic and immediately pull your money out. "It's so important to compare, to check in, to see how the entire market is doing, not just your portfolio."

Fernandez Paulino says to compare your rate of return to that of the S&P 500, which is a stock market index made up of 500 of the largest publicly traded companies in the U.S.

If your investments are doing about the same as the S&P 500, Fernandez Paulino says you're probably in a good position. If not, you'll want to rebalance your portfolio. How you rebalance depends on your specific situation – including how much risk you want to take on and how long you want to keep your money in the market. For a deep dive on investing, check out this Life Kit episode.

Make sure your savings are growing

Maybe you opened a savings account years ago. Have you considered moving that money or checked what sort of interest you're accruing?

"It's not uncommon if you have an account at a very big bank that you will be getting an interest rate of 0.01%," says NPR reporter Arezou Rezvani. "Not all savings accounts are created equal."

Some banks – digital-only financial institutions and some larger banks as well – offer savings accounts with interest rates between 4 and 5 percent. If your current bank isn't helping you grow your savings, consider other options. Just make sure wherever you end up putting your money, the federal government insures it. Look for the acronyms FDIC or NCUA to check.

Get ready for taxes

Have an employer? Get out your last paystub and check on your tax withholding, the money your employer is taking from your paycheck and sending to the government on your behalf. If they take out too little, you might get a big tax bill you weren't expecting in April. An accountant or tax planner can assist with the math. Also, the IRS has a calculator to see what your employer should withhold.

If you find the numbers are off, you can download a W-4 form from the IRS website, update it and submit it to your employer.

If you're self-employed or an independent contractor, you can prepare for your quarterly tax bills. "I think a really good habit to build right away is to set up a tax savings account," suggests Paco de Leon, author of Finance for the People and owner of a bookkeeping agency.

"There's a general rule of thumb that you should be saving anywhere between 10% to as much as 30% of every dollar you earn. Dump it into your tax savings account, and that way you are saving for potentially paying income taxes," says de Leon.

Get the most out of your health insurance

Weiss says a lot of people let last year's benefits roll over. But if you do that, you might be missing out on money-saving opportunities. For instance, you may be paying out-of-pocket for something that could be covered. "Take the time, sit down. Look at any updates to your health insurance plans."

Look out for open enrollment, which tends to start in November. During open enrollment, you can get a new health insurance plan on government-run exchanges. And if you get insurance through your employer, that's when they will also ask you to pick your insurance plans for the year. For more on how to get the most out of your health insurance, check out this Life Kit episode.

Wondering what you should be doing with your finances quarterly or monthly? Listen to the episode at the top of the page for more tips to focus on your financial goals.


The audio portion of this episode was reported by Marielle Segarra, produced by Sylvie Douglis and edited by Meghan Keane. We'd love to hear from you.

Email us at LifeKit@npr.org. Listen to Life Kit on Apple Podcasts and Spotify, or sign up for our newsletter.

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