Savings & Investment

Between the Holidays Do a Quick Money Makeover

Often we get caught up with life and we forget to go back and reassess the parts that we have put on autopilot.  While automating your finances is a great thing, and it takes a lot of the stress out of our lives, this automation should not just run for years and years without being looked at.  With that in mind, every year, between Thanksgiving and New Years, take an hour or so to do a quick money makeover.  You will have the peace of mind entering the new year that your finances are in order and you are set to prosper for another twelve months.  Follow these few steps to assure that you have everything under control.


Out of every paycheck you should be saving something.  This should go right into your emergency and opportunity money, from there it will ideally be earning a small amount of interest (right now that is most likely less than 1%, but the interest is not the point of this account).  During your money makeover, you should look at this account.  Has it grown?  Are you saving enough?  You want this to be at 6 – 24 months worth of living expenses (basically whatever it takes to sleep comfortably at night knowing that if something bad were to happen you would survive).  In the New Year, you might need to step up your savings, or you might be able to cut back if your account has grown large enough.


If your savings have grown enough, that does not mean that you can just start spending more money.  Instead, direct that money toward your investments.  But before you start dumping more money in, take some time to analyze them.  Has your risk tolerance changed and you need to rebalance to a new allocation?  Are you investing enough to reach your retirement goals?  What fees are you paying on your investments?  Perhaps switching to a different fund, advisor, or investment could help lower those fees.  Take a look at all of your investment accounts, including your 401k, IRA, individual account, and anything else you might have.  Enlist the help of a financial advisor if you do not want to do the grunt work on this.


Our lives are constantly changing, and therefore our insurance coverage may no longer be adequate.  Are you still paying full coverage on a car that is now 10 years old (or older)?  You may be better off with liability only.  Have the dynamics of your family changed recently?  You might need more life insurance.  Have you shopped for homeowners insurance in the past two years?  It only takes a few minutes to get a quote; there is a chance that you are overpaying if you have not looked around for a few years.  There are so many insurances that we need in order to avoid a financial catastrophe that sometimes we forget to see if they are enough (or too much).  A few minutes could help save you years of headache in the future.

Personal Possessions

We tend to accumulate a lot of stuff.  We gather so much stuff that the storage industry is booming.  It says a lot about our priorities that we can’t even fit all of our stuff in our own houses.  But instead of wasting money on a storage unit, take some time to look at all you have.  If it is causing your closets to burst open, then it may be time to get rid of the things you do not need anymore.  A good rule of thumb is that if you have not used it in the past 24 months, then you probably no longer need it.  Sell big ticket items on Craigslist or EBay, and put everything else aside to have a garage sale in the spring.


Americans love to have gym memberships, but they also love to not use them.  We are some of the unhealthiest people on the planet, yet gym memberships pull billions of dollars from our pockets each year.  Look back at this past year and see how often you used your gym membership.  If you have used it less than a couple times per month, go ahead and cancel it.  You can find a gym with a pay-as-you-go option, and then resolve to jog outside for 30 minutes twice per week.  You will save money, feel better, and be healthier.  Use the money you save to buy whole foods and cook healthy meals at home.

A money makeover does not need to be long, cumbersome, or difficult.  Simply take a look at your goals, and your current financial activity.  Are you saving enough?  Should you pick up a side hustle to make more money?  Are all of your needs currently being met?  Are you spending money on frivolous items?  Take an hour or two and sit down to look everything over.  You might find an area of weakness, or you might be encouraged when you see all is well.

When was the last time you did a money makeover?  How did it turn out?

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