Back to the Basics with 3 Simple Financial Checkups

Updated: Mar 22


At times, it can be easy to mentally put your finances on auto-pilot. That's a simple mistake can cost you thousands of dollars. It's a good idea for even the most experienced investor and money manager to go back and review their finances. What you can find is quite shocking.


The Basics

As you start to turn your financial life around and get things on track, the basic financial foundation can be seen as budgeting and spending plan, insurance, and retirement planning. We can complicate things by going more in depth on investment planning, cash flow planning, income planning, and more, but for today, we're only talking about the basics.


Inside of your budget and spending plan, live important things like housing, food, and transportation, the things you need for life. Necessities for life. Some people may also include things like vacations, hobbies, or things like that as well. I break down the spending plan into 4 quadrants:

  1. Living Money. Money you need to exist and live on each month.

  2. Wealth Money. Money you are using to "multiply" and build wealth.

  3. Play Money. Money you spend to have fun like vacations, hobbies, entertainment, etc.

  4. Others Money. Money you give to things and people you believe in. Non-profits, community initiatives, birthdays, etc.

Almost every dollar you spend should fall into one of these super-categories. I break it down this way to make it easier for you to see where your priorities lay. Sadly, most of America overspends in LIving Money and Play Money categories while they are heavily out of touch and balance with the Wealth Money Category.



3 Simple Financial Checkups

Regardless of what stage your finances are in, it's a good idea to do a checkup to see if anything has changed or shifted. Many of us setup things like autopay for our bills, auto-drafts for investments, or maybe you entered another level of income and your tax burden has shifted. Any number of changes can occur over a year or several years. Leaving your finances on auto-pilot can cost you bigtime!


It's not uncommon to find savings of $500 per month or more from doing a financial checkup especially if it's been a few years. Let's review a few areas where you might find some hidden cash you can repurpose.

  1. Print out you bank statement. Work through it line by line color coding it using the 4 spending plan super-categories mentioned earlier. Audit and compare it to your spending plan. Have you gotten slopping on sticking to your plan? are any of the categories are out of whack? Depending on my income, I like to maintain the following ranges for my spending plan. Living Money: 25-75% Wealth Money: 20-50% Play Money: 5-10% Others Money: 10-15% The goal of my spending plan is to enjoy life, but balance these four super-categories. I maintain respectable living money levels based on my income. I raise my wealth money levels as high as possible. Play money is set reasonably based on our income. Others Money generally sits around 15% for the year. 10% for our church. 5% for other things including birthdays and other ministries. While you're at it, check your mobile phone service for savings, check your account for any subscription services you're paying for but forgot to cancel, and check your cable or internet service provider for better rates.

  2. Check your insurance rates. Many Americans don't shop their insurance after it is setup. The truth is insurance rates can change especially if you've been with the same carrier for years and maintained a great standing. Some of the insurance agents I work with save their clients anywhere from hundreds to thousands of dollars in insurance premiums per month! For example: a $300-500 savings per month on your car, home owners is $3,600 to $6,000 per year! Business insurance can save you even more! A $6,000 per year insurance savings per year can be invested over 21 years to grow to $426,000 (based on 10% annual average return)! A simple insurance check can be worth literally hundreds of thousands of dollars to you!

  3. Retirement and investment planning. The standard line for financial advisors and planners is to invest 15% into retirement. I don't like using percentages for this number mainly because its variable and if you make $50,000 per year 15% is only $7,500 and that's just not much money. I prefer to set hard number goals like invest $10,000 per year as a starter then work to grow that number $20,000 per and even more after a few years. This type of thinking causes your braining and mindset to stretch. You brain is an incredible thing and once you set a problem like this, "how do I invest $10,000, $20,000, or more each year?" you brain will work on that problem over and over again even subconsciously. So ask yourself this question? Am i investing enough into retirement this year? Currently with inflation and depending on age until retirement, I like setting the minimum numbers around $3 million to $5 million. for many people, that is a very doable number for someone in their 20s, 30s or even 40s. If you're starting from scratch in your 50s, you have your work cut out for you and you'll need to get creative and aggressive. From my interviews with dozens of millionaires, I've found it takes 10 to 20 years for someone to become a millionaire once they make the millionaire choice. Some do it sooner. Some take longer. But the biggest group takes 10-20 years. Check your investment and retirement plan returns. How are they performing. Time is money and the more time you have the better, but you need to get a respectable rate of return and growth on your investments. I set 10% per year as a minimum goal. Some of my investments have delivered much higher. Some have underperformed that number. But ever year, double check your investments and see if they are on track. Be open to exploring additional higher growth opportunities. Some of the investment guys I hang out with these days tout 15%, 20%, and even higher rates of returns on their investment strategies, but they aren't getting those returns in mutual funds or 401Ks. They're getting them through real estate syndication, other forms of real estate investing, and various stock trading methodologies. Ponder these questions: How does a 5 year old that made the millionaire choice become a millionaire by age 25? How does a person build a $25 million net worth by age 32? Is it possible for you to become a millionaire within 10 years even if you start from scratch? Yes. But it isn't by investing in mutual funds. That said, mutual funds aren't evil or bad.

Last Thoughts

Review your monthly finances and check your spending plan. Check your insurance rates for savings that you can use for investing. Consider looking at other investment opportunities. Any one of these things could be worth $250,000 or more to you in future wealth.

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