Your Financial Report Card: How Are You Really Doing?
We regularly measure progress in other areas of life.
Doctors check our health. Employers conduct performance reviews. Students receive report cards.
But when was the last time you gave your finances a grade?
A financial report card isn’t about deciding whether you’re “good” or “bad” with money. It’s a simple way to periodically evaluate different areas of your financial life and identify where you may need to make adjustments.
Here are six categories worth reviewing.
1. Cash Flow: Do You Know Where Your Money Is Going?
You don’t need a spreadsheet documenting every dollar you spend to understand your cash flow.
But you should have a general understanding of:
- How much you’re bringing home
- Your regular monthly expenses
- Your discretionary spending
- How much you’re consistently saving
One important thing to watch is lifestyle creep.
As income increases, spending often increases right along with it. If you’re earning significantly more than you were several years ago but aren’t saving any more, it may be time to take a closer look.
Report Card Question: Is your spending allowing you to make consistent progress toward your financial goals?
2. Emergency Savings: Could You Handle the Unexpected?
Financial emergencies rarely make appointments.
A furnace stops working. A car needs repairs. A medical bill arrives. Employment changes unexpectedly.
Having accessible emergency savings can help prevent those surprises from turning into long-term financial setbacks.
There’s no single emergency fund amount that’s appropriate for everyone. Your job stability, monthly expenses, family situation, and other resources should all factor into the decision.
Report Card Question: If a significant unexpected expense occurred tomorrow, where would the money come from?
3. Retirement: Are You Saving or Actually Planning?
Contributing to a retirement account is important—but retirement planning goes beyond making contributions.
Consider:
- Are you taking advantage of an employer match?
- Have you increased your savings as your income has grown?
- Are your investments appropriate for your goals and time horizon?
- Do you know approximately how much retirement income you’ll need?
- Have you considered when you may claim Social Security?
- Do you have a strategy for taxes and withdrawals in retirement?
The goal isn’t simply to accumulate the largest account balance possible. It’s to build resources that can support the life you want.
Report Card Question: Do you know whether you’re currently on track for retirement?
4. Debt: Is Your Debt Working Against You?
Debt deserves some context.
A mortgage with a manageable payment is very different from carrying high-interest credit card balances month after month.
Review your outstanding debt, including the balances, interest rates, and monthly payments.
High-interest debt in particular can compete with your ability to save and invest for other goals.
Report Card Question: Do you have a clear strategy for managing and eventually eliminating unnecessary debt?
5. Protection and Estate Planning: Are the Basics Covered?
This may not be the most exciting category on your report card, but it’s an important one.
Review your:
- Life insurance
- Disability insurance
- Beneficiary designations
- Will
- Power of attorney
- Healthcare directives
- Overall estate plan
These documents and policies shouldn’t simply be created and forgotten.
Marriage, divorce, births, deaths, career changes, retirement, and significant changes in your finances may all create a reason to review them.
Report Card Question: If something happened to you tomorrow, would your financial affairs be handled the way you intend?
6. The Big Picture: Does Everything Work Together?
This may be the most important category of all.
Investments are only one part of your financial life.
Your retirement strategy, taxes, insurance, estate planning, cash flow, investments, and short- and long-term goals should work together.
Sometimes people are doing everything “right” individually but haven’t looked at how all of the pieces interact.
That’s where comprehensive financial planning becomes valuable.
You Don’t Need Straight A’s
The purpose of a financial report card isn’t perfection.
Maybe your retirement savings get an A, while your estate plan earns an “Incomplete.” Maybe your emergency fund is in great shape, but you’ve been meaning to tackle some high-interest debt.
Identifying those gaps is the whole point.
Your financial life will continue to change, which means your plan should change with it.
At Paragon Wealth Management, we believe regular financial reviews can help you understand where you stand today, where you want to go, and what adjustments may help you get there.
Because when it comes to your financial report card, the goal isn’t a perfect score.
It’s continued progress.
About Charles
Charles McNamara, III (Charlie), is a Founding Partner, Financial Advisor, and President at Paragon Wealth Management, a financial services firm based in Doylestown, Pennsylvania, dedicated to professionally supporting, educating, and providing informed direction to each and every client. Charlie’s passion for working with clients one-on-one to find specialized solutions to pursue their financial goals drives the firm’s client-focused mission and continued success. He values the confidence clients have in him to always keep their best interests in mind.
A veteran of the financial services industry since 2000, Charlie brings an extraordinary level of knowledge and experience to the financial field. After obtaining a business finance degree from Delaware Valley University, he began his career as a financial advisor with Prudential Financial in 2001, and was promoted to management in only three years due to his hard work and dedication. With an entrepreneurial spirit and a passion for helping people solve problems, he launched his own practice in 2007.
When he’s not at work, Charlie spends time with his wife, Lisa (co-owner of local salon Moxie), daughter, Carissa, and their two dogs and cat. He enjoys weightlifting, running, golfing, fishing, and giving back to the community through his church, Our Lady of Mt. Carmel, and local organizations, such as the Travis Manion Foundation. To learn more about Charles, connect with him on LinkedIn.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
Advisors associated with Paragon Wealth Management may be either (1) registered representatives with, and securities offered through LPL Financial, Member FINRA/SIPC, and investment advisor representatives of Great Valley Advisor Group, or (2) solely investment advisor representatives of Great Valley Advisor Group, and not affiliated with LPL Financial. Investment advice offered through Great Valley Advisor Group, a registered investment advisor. Great Valley Advisor Group and Paragon Wealth Management are separate entities from LPL Financial.