The Annual Financial Checkup: 10 Numbers to Review Every Year
You get an annual physical. Your car gets an annual inspection. Your finances deserve the same attention — here are the 10 numbers to check.
Most people interact with their finances daily (spending) but review them annually never. The result is a slow drift away from goals that only becomes apparent during a crisis — a job loss, a medical bill, a market crash that reveals just how unprepared you were. An annual financial checkup takes about an hour and prevents the kind of surprises that take years to recover from.
The 10 Numbers
1. Net worth: total assets minus total liabilities. This is the single most important number in personal finance because it captures everything — savings, debt, investments, home equity — in one figure. Track it annually and the trend line tells you whether you are building wealth or eroding it, regardless of income. Use our net worth calculator to compute yours.
2. Savings rate: what percentage of gross income you saved and invested this year. Under 10% means you are falling behind. 15-20% keeps you on track for a standard retirement. Above 25% and you are building serious wealth or targeting early retirement. This number matters more than investment returns because it is entirely within your control.
3. Emergency fund months: liquid savings divided by monthly essential expenses. Under 3 months is a financial emergency waiting to happen. 3-6 months is the standard recommendation. Above 6 months and you might be holding too much cash that should be invested.
4. Debt-to-income ratio: monthly debt payments divided by gross monthly income. Under 20% is healthy. 20-36% is manageable but watch the trend. Above 36% is a warning sign. Above 43% and most lenders will not approve new credit.
5. Credit score: check it free at annualcreditreport.com. Above 750 gets you the best rates on everything. 700-749 is good. Below 700 costs you money in higher interest rates on every future loan.
6. Insurance coverage: does your coverage match your current life? Marriage, children, home purchase, and income changes all require insurance adjustments. An annual review with your agent takes 30 minutes and can reveal critical gaps.
7. Retirement projection: are you on track? Run your current balance, contribution rate, and expected returns through a retirement calculator to see if you will hit your number. Our FIRE calculator does this in seconds.
8. Investment allocation: has market movement shifted your portfolio away from your target? A 70/30 stock/bond portfolio might have drifted to 80/20 after a strong stock year. Annual rebalancing brings it back to your intended risk level.
9. Tax withholding: did you get a large refund or owe money? Either one means your W-4 needs adjustment. A refund over $1,000 means you gave the government an interest-free loan.
10. Beneficiary designations: are your 401(k), IRA, and life insurance beneficiaries current? These override your will, so an outdated beneficiary (like an ex-spouse) can direct your assets to the wrong person regardless of what your will says.
Get your overall score in 2 minutes with our Financial Health Score quiz — it evaluates all five key areas and gives you personalized recommendations based on your weakest category.