Financial Fitness Checkup

What to Review in February to Start the Year Strong

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Did you know that February is recognized as Financial Fitness Month?  Many of us begin the new year with ambitious goals.  Think about how often January starts with a new diet or workout plan.  At first, motivation is high and intentions are strong.  But as the weeks pass, routines may slip and old habits quietly return.    

Financial goals can follow the same pattern.  We may start the year determined to save more, spend less, or pay down debt, only to find that daily life gradually pulls us off course. The good news is that February is an ideal time to pause and reset.  By taking the time to review where we stand financially, we can refocus, make thoughtful adjustments, and set ourselves up for a healthier, more confident year ahead.

Here are 6 steps you can take to strengthen your financial fitness:

1. Check your credit report and score.

Your credit score impacts mortgage rates, car loans, insurance premiums and more.  The lowest interest rates and most favorable terms are generally reserved for those with excellent credit, and while potential employers cannot see your credit score, in circumstances when applying for a position in certain fields such as finance, sensitive data management or law enforcement, some may request permission to access your reports.  Unfortunately, in the digital world we live in, identity theft and reporting errors are common. 

What to Do

• Request free credit reports at AnnualCreditReport.com. You are allowed by law to see your information annually, for free, and this type of self-inquiry will not affect your credit scores.  Ideally, you should strive to check your information every four months, on a rotating schedule, so that you can monitor what each of the bureaus has listed.  For instance, you could review your Experian report in February, your TransUnion report in June and your Equifax report in October. 
• Review for inaccuracies.  Common errors include incorrect information about your identity, incorrect reporting of an account’s status, data management errors, or balance errors.  It’s possible to find accounts incorrectly reported as late or delinquent, closed accounts reported as open, or unfamiliar accounts attributed to you resulting from identity theft. 
• Dispute any errors you may find. Contact the credit bureau that is reporting the incorrect information.  Be prepared to explain in writing what is wrong and include any documentation that will support your claim. 

2. Reset your budget.

February can be a good time to review your budget.  Holiday spending is behind you, January expenses have settled, and tax documents are arriving that provide a full picture of last year’s income.

What to Review

• Start by separating fixed expenses, such as your mortgage or rent, car payments, insurance, and student loans, from variable expenses like utilities, groceries, dining out, entertainment, and travel. 
• Evaluate your savings.  Are you consistently contributing to long-term retirement accounts such as a 401(k) or an IRA?  Do you currently have an emergency fund or do you need to adjust your budget so that you can save up three to six months of essential living expenses?
• Look for “slow leaks.”  Small recurring charges, unused subscriptions, credit card balances, and unplanned grocery spending can quietly drain resources over time.  Even minor expenses can pull money away from your larger financial goals.

What to Adjust

Create a plan to pay down any high-interest debt you may be carrying, like credit cards.  Review your variable expenses and identify areas where you can set reasonable limits.  Consider options such as balanced billing for utilities to help create more predictable monthly costs.  Cancel unused subscriptions and set spending caps on discretionary categories like dining out.  Adjust your savings goals if necessary.  Even small adjustments can help you to see meaningful progress over the rest of the year.   

3. Conduct an emergency fund checkup. 

A sudden loss of income can make it impossible to cover day-to-day expenses.  Having an emergency fund available can carry you through several months of hardship or be the source of immediate cash you may need, as putting unexpected expenses on a credit card is not always an option.  An ideal goal is to set aside between three to six months of essential living expenses.  Those who are self-employed with a fluctuating income or families with children may want to aim for six months or more. 

Key things to consider:

• Do you have 3-6 months of expenses saved?
• Is your emergency fund easily accessible in a bank account such as an interest-bearing savings account or a money market account?
• Have your monthly expenses increased since last year? Have you used any money from the account for something like an emergency home repair?  Do you need to replenish funds or add to your savings? 

If you need to build your emergency fund, pay your fixed expenses such as housing, utilities, food, and taxes first.  Then pay down credit cards, student loans, and make retirement contributions.  When these needs are met, make funding your emergency account a priority.

4. Review retirement contributions.

As you are conducting a financial fitness checkup, it is a good idea to check in on your retirement savings plan.  When you are no longer working, you will have to rely on the financial preparations you have already made. 

• For 2026, the maximum employee contribution to a 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan is $24,500 with higher catch-up contributions for those aged 50 and older.
• In 2026, the limit on annual contributions to an IRA is $7,500. 

Your financial advisor can help you to review your personal financial situation and make sure that you are on track with your savings and taking advantage of any employer match that might be available.

5. Evaluate your insurance coverage.

There are multiple areas of your life where you want to ensure that you have adequate insurance.  Every policy comes with its own exclusions and limitations and premiums can vary depending on a number of factors.  A review can help determine if you are properly covered and if you are taking advantage of any discounts that might be available to you. It can be helpful to go over the specifics with a knowledgeable insurance agent.  Here are some of the types of coverage you should consider:

• Life insurance provides a financial safety net for your loved ones.  It can cover death-related expenses, debts, and ongoing living costs for your loved ones. 
• Disability insurance covers a portion of your income if you are unable to work due to injury or illness.
• Health insurance covers a range of medical expenses. Medicare, Medicaid and private insurance plans each come with their own levels of coverage and associated expenses.
• Auto insurance is essential if you own a vehicle, but coverage levels can vary significantly.  Uninsured motorist coverage (UM) and underinsured motorist coverage (UIM) can help financially protect you if you are involved in an accident with someone who lacks sufficient insurance.
• Homeowners insurance covers the structure of your home, personal property, and liability. Renters insurance protects personal property and liability.  Depending on whether you own or rent, this insurance can protect you in a number of ways.
• Umbrella insurance (AKA excess liability insurance) offers you extra liability protection over and above your other policy limits. If you are sued and deemed at fault, first you look at your homeowners, auto, or renters insurance policies for the coverage they provide, then an umbrella policy covers you above that amount.
• Long-term care insurance helps cover the cost of care for individuals with chronic illnesses, disabilities, or age-related needs.  This coverage may pay for assistance with daily activities such as bathing, dressing, and eating.  Care can be provided at home, in an adult day care setting, an assisted living facility, or a nursing home. 

6. Is it time to review your estate planning documents?

When you create an estate plan, it reflects your circumstances and wishes at that specific point in time.  As life evolves, you will have changes that should be accommodated in your estate planning documents.  Reviewing your estate plan every three to five years helps ensure it continues to align with your goals.  However, if you have had any milestones in the past year, it might be time to revisit your original documents.  Here are some life events that warrant a review:

• You got married or divorced.
• You bought a house or other real estate.
• You had a baby.
• You inherited money or came into a sudden financial windfall.
• Your child got married.
• You became a grandparent or your family grew.
• Your loved one has special needs.
• You moved to another state.

Your financial advisor can help you to review or update your estate planning documents.

Small Steps Can Lead to Stronger Finances

Financial fitness doesn’t have to be about dramatic overhauls or perfection.  It’s about having a clear picture of your finances and making thoughtful adjustments.  Just like your physical health, your financial well-being benefits from regular check-ins and small, sustainable improvements. 

If you are married, consider working through these steps together with your spouse.  Setting aside time for a shared financial review can be a helpful way to make sure that your goals are aligned and that there is open communication regarding priorities and responsibilities.  It can reduce misunderstandings and strengthen teamwork when making important decisions.  Turning this check-in into an annual February tradition can help you both stay informed, engaged, and confident about the direction you are heading.

Whether you need to fine-tune your budget, increase your retirement contributions, or update your estate planning documents, your financial advisor can help you evaluate your current situation and develop a strategy to strengthen your financial foundation for the year ahead.  If you would like more information on how we can help you, please contact us.