Most people check their credit card statement once in a while but never look at what their bank is actually charging them across all their accounts. Annual financial checkups aren’t exciting, but they catch the kind of slow money leaks that cost you hundreds or thousands per year without any single charge being large enough to notice.
Review every recurring charge
Pull up your bank and credit card statements from the last three months. Look at every recurring charge. You’re hunting for three things:
- Subscriptions you forgot about. The average American has 12 paid subscriptions. Streaming services, apps, gym memberships, cloud storage, meal kits, news sites. At least one or two of those are probably not getting used.
- Price increases you didn’t notice. Services quietly raise prices. Your streaming plan went from $13 to $16. Your insurance premium crept up $30. Individually small, collectively meaningful.
- Duplicate services. Two cloud storage subscriptions. Two music streaming accounts. A gym membership and a fitness app that overlaps.
Canceling $50 to $100 in unused monthly subscriptions saves $600 to $1,200 per year. That’s real money redirected to something useful.
Check your insurance rates
Insurance companies count on inertia. They raise rates gradually, betting that you won’t bother shopping around. Auto insurance rates in particular have increased 20% to 30% over the past two years due to rising repair costs and car values.
Get quotes from three to four competitors for auto and home insurance annually. You don’t have to switch, but knowing what competitors charge gives you leverage to negotiate with your current insurer. Many will offer a “loyalty discount” or rate adjustment when you tell them you’re considering leaving.
Check your coverage limits too. If your car has depreciated significantly, you might be overpaying for collision and comprehensive coverage. The payout on a total loss is based on the car’s current value, not what you paid for it.
Review your investment fees
If you have a 401k, IRA, or brokerage account, check the expense ratios on your funds. Expense ratios are expressed as a percentage and deducted from your returns. A fund with a 0.03% expense ratio costs you $3 per year for every $10,000 invested. A fund with a 1.0% expense ratio costs $100.
That difference sounds small, but over 30 years on a $100,000 portfolio earning 8% gross returns:
- At 0.03% fees: portfolio grows to about $986,000
- At 1.0% fees: portfolio grows to about $761,000
The fee difference cost you $225,000. Broad index funds from Vanguard, Fidelity, and Schwab have expense ratios under 0.10%. If your 401k offers a target-date fund or index fund with low fees, that’s usually the best default option.
Update your tax withholding
If you consistently get large tax refunds (over $500), your withholding is too high. You’re giving the government an interest-free loan. Adjust your W-4 to keep more of your paycheck throughout the year.
If you consistently owe money at tax time, your withholding is too low and you might face penalties. The IRS withholding estimator at irs.gov helps you calculate the right amount.
Life changes that affect withholding: getting married, having a kid, buying a house (mortgage interest deduction), starting a side gig, or getting a significant raise. After any of these, update your W-4.
Check your credit report for errors
Pull your credit report from annualcreditreport.com at least once a year. Look for accounts you don’t recognize, incorrect balances, and late payments you know you made on time. About 25% of consumers have an error on their credit report that could affect their score, according to a Federal Trade Commission study.
Disputing errors is free and can be done online through each credit bureau’s website. If an error is lowering your score, fixing it could save you thousands in interest on future loans.
Reassess your savings rate
If you got a raise last year, did your savings rate go up too? Or did the extra income get absorbed by lifestyle inflation? A good rule of thumb is to save at least half of every raise. If you got a $3,000 annual raise, bump your monthly savings by $125.
Check your emergency fund balance against your current expenses, not last year’s expenses. If your rent went up, your emergency fund target should go up too. Three months of expenses at $3,000/month is $9,000. If expenses have increased to $3,500/month, your target is now $10,500.
Set a calendar reminder
Pick a date. Your birthday, New Year’s, the start of a season, whatever you’ll remember. Block 90 minutes and go through this checklist. Doing it once a year catches most of the slow leaks and keeps your financial setup optimized for your current situation rather than the situation you were in when you set everything up.