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How Is Your Fiscal Health? The Importance of Conducting a Fiscal Check-up

The importance of financial planning is often overlooked for one reason or another. Conducting financial health checks is a good way to identify and resolve potential issues. Learn about five key areas of where to do a fiscal checkup.

Many people recognize the importance of seeing their physician once a year for an annual physical checkup. Doing so can help ensure good health while possibly identifying any potential problems early on so they can be addressed before they become more serious.


The same concept applies to your personal finances. “In fact, the beginning of the year is a good time for a ‘fiscal checkup’ or financial planning. Sit down with your advisor to conduct a financial health check to determine the condition of your personal financial situation,” says Cadence Bank EVP and Private Banking Executive Wendel Skolaski.


As a private banker, Skolaski serves as the leader of your team of Cadence Bank personal finance professionals. This team consists of experts in the areas of Wealth Management, Private Banking, Trust Services, Insurance Services and Investment Services.


When he performs a fiscal checkup with clients, Skolaski says they usually discuss the following five areas:


1. Progress toward the past year’s financial goals — “Now is the time to compare the list of financial goals you set at the beginning of last year with what you were able to accomplish over the past year,” says Skolaski. 


For example, maybe you had a specific income goal — are you going to achieve it? Or maybe you wanted to eliminate your debt, or at least pay down a certain percentage of your debt. Or perhaps you had a savings goal, like maxing out contributions to your 401(k) retirement plan or health savings account.


2. Establishment of new financial goals for next year — Your progress toward reaching last year’s financial goals can serve as a benchmark for setting new goals for the upcoming year. Skolaski says he often challenges clients to really push themselves when setting financial goals. 


“Set some real ‘stretch’ goals for yourself and your family,” he says. For example, if you think you can comfortably save $10,000 in your 401(k) this year, set a goal of saving $15,000. Or if you want to slash your debt by 50 percent, set a goal of slashing it by 75 percent.


3. Updates to estate planning documents — Changes in your family situation could necessitate updates to key estate planning documents like your last will and testament, revocable living trust, power of attorney and healthcare directive. “So you should review these documents with your financial advisor and perhaps your attorney at least once a year,” says Skolaski.


Examples of changes that might trigger the need for updates to these documents include marriage, divorce, birth of a child or a move to a different state. If you’ve gotten divorced, for example, you will probably want to change the beneficiary designation on your life insurance policy and retirement accounts.


4. Adequacy of life and disability insurance coverage — If you established these policies many years ago, the coverage amounts may no longer be sufficient for your current level of income or size of family. 


Skolaski recommends determining how much annual income your spouse and children would need to maintain their current lifestyle if you were to die or become disabled and no longer able to earn an income and base your coverage amounts on this. “Don’t forget to include education expenses in your calculation if your kids go to private school or plan to attend college,” he says.


5. Personal balance sheet review — Take an inventory of all the assets you own as well as all the debts you owe to get a good picture of your personal balance sheet and overall net worth. Then compare this to your personal balance sheet and net worth from previous years to evaluate which direction they are moving — positively or negatively, up or down. 


“This can be used as a benchmark for setting balance sheet and net worth goals for this year,” says Skolaski.


For financial planning assistance or help in conducting a fiscal check-up, please contact your Cadence Bank Private Banker.


You may also be interested in Three Creative Ways to Use Life Insurance.


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This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

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