Crucial checks you can carry out to assess 'financial health' and why it's vital now

When did you last conduct a financial health check? At MoneyMagpie, we know how hard it can be to come face-to-face with your debts or financial worries, but taking stock of your finances and future plans can surprise you!

A financial health check doesn’t take long and it could set you up for a healthy future bank balance. But what Is a Financial Health Check?

A financial health check involves taking stock of your current financial situation and how it aligns with your future goals. You might find you’re actually better off than you expected, or you can find places you can be more savvy to start managing your money so it works hard for you.

But why is right now the ideal time to do your financial health check? We’ve come up with five reasons to spur you into action.

The Election is Coming Up

Everyone’s talking about the General Election and nobody knows what it will mean for our finances yet. Manifestos are still being honed as campaign trails take off. But having a clear idea of your own financial situation can guide your election choice.

At MoneyMagpie, we advocate for choosing policies over personality, and as people’s financial situations and goals differ this means they may consider each party’s financial promises in a different light. Those who rely on a second income from a buy-to-let property will be interested in things like Capital Gains Tax, while low-income earners will be interested in minimum wage rises and an increase to the Personal Allowance.

Knowing where your finances stand right now can help you make vital decisions when it comes to your voting choice.

Can You Afford That Holiday?

Another reason that right now is the best time to take stock of your finances is that the summer holidays are coming up! You might have decided this is a year that you’re not going to travel, and be pleasantly surprised that you can afford a city break.

Or, if you’ve been paying in instalments since booking last year, it could be a reality check that you need to cut back on a few other things to make sure you have some ‘fun money’ to spend while you’re away. Analysing your finances now gives you time to plan ahead for your summer fun.

You Could Be Missing Out

If you opted out of your workplace pension when your salary was lower or your expenses higher, it’s easy to think staying opted out is best. But if you’ve got more disposable income now, or have found ways to save elsewhere, putting money into your pension is a great move.

Employer contributions and Government top-up means you’re missing out on free money if you’re opted out of your pension. Putting away a small amount each month now, with extra free cash topping it up, will help set you up for a more comfortable retirement.

Your Savings Aren’t Working Hard Enough

Are you guilty of leaving your money in the same easy access cash ISA you’ve had for ten years? Perhaps you took advantage of a premier interest rate on a savings account a few years ago and are long out of the fixed term.

With recent interest rate changes, your savings could be working much harder for you if you’ve neglected renewing your accounts in the past year or so. A few clicks could easily see you move from a forgotten 0.5 percent rate to a 4.5 percent rate or higher.

You Haven’t Sorted Out Your Will

Nobody likes to think of their mortality, especially if it seems decades away. However, if you don’t have a will or haven’t updated it in ages, your current finances might not be reflected in it. This is especially true if you’ve experienced major life changes like having children or grandchildren, or getting married or divorced.

A financial health check will ensure you know where you stand with your estate and how you might want it divided up should you meet an earlier end than anticipated.

Top Tips for Conducting a Financial Health Check

Whether you want to get to grips with debt before it swamps you, or you have had a windfall that’s sitting in a low interest account, it’s easy to conduct your own financial health check now.

First, do a budget. Gather your bank accounts, credit cards, student loans, mortgages, everything finance-related in one place. Spend an afternoon getting to grips with what you’re paying each month – and where you can save. Could you move all of your credit card balances to a new interest-free card? Maybe it’s time to remortgage for a better rate. Or perhaps, those ‘little treats’ you buy yourself are costing more than you think.

When you have a picture of your budget, plan for the future. Assume your rent or mortgage will rise, as well as the cost of living rising with inflation. Take a look at what you can set aside now to protect against it, and what you can do to make your money work harder for you for the future.

Next, find a financial adviser like Fintuity. They have a free AI driven financial health check tool to start you on your journey that'll give you bespoke advice on budgeting, savings, pensions and more. A financial adviser is ideal for getting a really deep insight into your finances and how best to plan for your future money goals.'