Now's the time to do a thorough checkup.

As we begin a new year, it’s a great time to self-assess your finances. In between your desperate new weight loss workouts, getting back to the Zoom-childcare juggle, and watching the Gasparilla Bowl (or worse), try taking a few quiet hours to figure out where your family is and where you’re headed, financially speaking. You may have avoided a bare look at your finances because you fear the reality will be grim. Maybe you are in debt. Maybe you haven’t saved enough for your retirement.

But assuming you’re not reading this note with that milestone just around the corner, you’ve still got time to course-correct. “Forty is financial middle age, from an earnings perspective,” says Jeff Winn, Managing Partner at International Assets Advisory in Orlando. “Don’t stress out or celebrate. You don’t win or lose at the end of the second quarter. But if you don’t come up with a game plan, you’ll be toast,” says Winn. As you pull up all of your accounts and evaluate them en masse, here are six questions you should ask yourself: 

1. How’s my emergency fund? I have one, right? 

In the course of writing this short-lived (thus far) newsletter, I’ve spoken to twenty four (and counting) planners and financial experts, and in each conversation, without fail, the rainy day fund (or RDF) comes up. The pandemic has torn through the personal finances of countless Americans, so a value of a personal safety net should be obvious. As a rule of thumb, you want to have three to six months of your household spending saved up, but you can dial this in, depending on how hard you think it will be to find another job should you lose yours.

“If you're in a hot field where you can find a job tomorrow, maybe you don't need six months — you can be more aggressive,” says David R. Abate, a CFP at Strategic Wealth Partners in Independence, Ohio. “But if you're in a field that's kind of struggling, you're gonna want to be more conservative.” 

2. Do I have consumer debt? 

How many digits deep are those credit card statements? If you’re looking at a number that’s higher than the balance in your checking account, that’s trouble. By building debt on a credit card, you’re paying a high borrowing cost for money you likely can’t afford through your regular stream of income. “The first thing you should attend in your financial life is to is try your very best to be get out of consumer debt,” says Winn. Make a plan to knock it out via a strict payment schedule — twelve or even twenty-four months, if you need them. 
 

3. Am I automating? 

“Success in anything, be it finance or playing soccer, is just doing the right things long enough,” says Winn. Having good regular financial practices at this point can be more important than hitting benchmark numbers. Automate deposits into your 401K, savings and IRA, and the dollars will eventually pile up. If you’re just socking away money when you can — what Winn calls a “best effort” approach — it’s likely not enough. ...