Your Annual Financial Checkup: A Complete Guide

You get your teeth cleaned twice a year. You take your car in for an oil change every few thousand miles. But when was the last time you gave your finances a thorough review?

For most people, the answer is never. Financial decisions happen in fragments — a raise here, a new subscription there, a 401(k) set up years ago and never revisited. Over time, those fragments drift. Insurance gaps appear. Beneficiaries still list an ex-spouse.

An annual financial checkup fixes that. A few focused hours once a year keeps everything on track and catches problems before they become expensive.

1. Take a Net Worth Snapshot

Everything starts here. Your net worth — total assets minus total liabilities — is the single best measure of your financial health. It's the number that tells you whether you're moving forward or falling behind.

List every asset (bank accounts, investments, retirement accounts, real estate equity, vehicles) and every liability (mortgage, student loans, auto loans, credit cards). Subtract liabilities from assets. Compare to last year. Did it grow? By how much?

Use our free net worth calculator to get this number in minutes. This snapshot is your baseline. Every other item on this checklist either protects your net worth or helps it grow. If you're already tracking monthly, this step takes seconds. If you're not, this is the year to start.

2. Review Your Insurance Coverage

Insurance is the boring part of personal finance — until you need it. An annual review ensures your coverage still matches your life.

Check these policies:

• Health insurance: Are you on the best plan for your current usage? Would a high-deductible plan with an HSA save you money?
• Auto and home/renters: Are your coverage limits still appropriate? Have you made improvements that need additional coverage?
• Life insurance: Does your coverage reflect your current dependents and mortgage balance?
• Disability insurance: Often overlooked, but your earning ability is your most valuable asset during working years.
• Umbrella policy: If your net worth has grown significantly, an umbrella policy provides extra liability coverage for relatively low cost.

Gaps in coverage can wipe out years of progress in a single event.

3. Update Your Beneficiaries

This is the item most people skip — and it's one of the most important. Beneficiary designations on retirement accounts, life insurance, and bank accounts override your will. If your 401(k) still lists an ex-partner, that's where the money goes regardless of what your estate plan says.

Review beneficiaries on all 401(k)/IRA accounts, life insurance policies, bank and brokerage accounts, and HSAs. Life changes — marriage, divorce, births, deaths — should all trigger a review. Even if nothing changed, confirm everything annually. Five minutes prevents a nightmare.

4. Check Your Credit Reports

Pull free credit reports from all three bureaus at AnnualCreditReport.com and look for errors (wrong balances, accounts that aren't yours), fraud (accounts you didn't open), and status issues (incorrect late payments).

Errors on credit reports are surprisingly common — some studies suggest one in five reports contain a material mistake. Catching them early protects your credit score and your borrowing costs for years.

5. Evaluate Your Tax Strategy

Tax planning shouldn't happen in April when you're scrambling to file. Your annual checkup is the time to look ahead.

Key questions to ask:

• Am I maximizing tax-advantaged contributions? (401(k), IRA, HSA, 529)
• Should I be doing Roth conversions this year based on my income?
• Am I holding investments in the most tax-efficient accounts?
• Do I have capital losses I can harvest to offset gains?
• Has my income changed enough to affect my tax bracket?

Even small tax optimizations compound dramatically over time. Saving $2,000 per year in taxes and investing the difference adds up to over $150,000 across 30 years at 7% returns.

6. Review Your Estate Planning Basics

You don't need to be wealthy to need an estate plan. At minimum, every adult should have:

• A will — directs how your assets are distributed and names guardians for minor children
• Power of attorney — designates someone to make financial decisions if you're incapacitated
• Healthcare directive / living will — specifies your medical care preferences
• Digital asset plan — how should your online accounts, passwords, and digital assets be handled?

If you already have these documents, review them annually to ensure they still reflect your wishes. If you don't have them yet, this is the year to get them done. Online services make basic estate planning affordable, and the peace of mind is worth every dollar.

7. Rebalance Your Portfolio

Over the course of a year, market movements shift your asset allocation. A portfolio that started as 80% stocks and 20% bonds might drift to 90/10 after a strong equity year — taking on more risk than you intended.

Rebalancing means:

• Checking your current allocation against your target
• Selling overweight assets and buying underweight ones (or directing new contributions accordingly)
• Reviewing your risk tolerance — has anything changed in your life that should shift your allocation?

Annual rebalancing keeps your risk level consistent and forces a disciplined "buy low, sell high" behavior. It's one of the few investment habits that reliably improves long-term outcomes.

When to Do Your Financial Checkup

Pick a consistent time each year. January works for fresh-start energy and tax-year alignment. Your birthday is easy to remember. Year-end wraps things up before the holidays. The specific date matters less than consistency — put it on your calendar now with a recurring reminder.

How to Make It a Habit

The biggest challenge isn't knowing what to review — it's actually doing it. A few strategies to make your checkup stick:

Start small. If the full checklist feels overwhelming, tackle two or three items this year and add more next year. A partial review beats no review.

Block the time. Schedule 2-3 hours on a specific day. Protect it like a doctor's appointment.

Make it a ritual. Pair it with something enjoyable — a favorite coffee shop or a quiet weekend morning.

Track monthly, review annually. If you're tracking your net worth throughout the year, the annual checkup becomes a quick confirmation instead of a heavy lift. The daily awareness does most of the work; the checkup catches everything else.

The Bottom Line

An annual financial checkup isn't complicated, but it's transformative. Most financial problems don't appear overnight — they build slowly through neglect. A yearly review catches drift before it becomes damage.

Your net worth is the scoreboard. Insurance protects it. Beneficiaries direct it. Credit reports guard it. Tax strategy grows it. Estate planning preserves it. Rebalancing maintains it. Explore Nova's features to make monthly tracking effortless so your annual checkup is a breeze. One afternoon per year — that's all it takes.

Keep Reading

• 5 Financial Habits That Build Wealth Over Time
• Tax Strategies That Actually Grow Your Net Worth
• Retirement Planning Starts With Knowing Your Net Worth