A financial checkup helps you gather information that tells you where you are now and helps point you in the direction you d like to go. By analyzing your savings and insurance coverage, you can set suitable goals. Savings are the dollars you put away to cover short-term needs such as emergencies, irregular expenses and future purchases. Emergency funds can carry you through if you lose a job or have unexpected medical expenses or travel needs because of a family emergency. It is recommended that you have three months of living expenses in accounts such as money market funds and short-term certificates of deposit.
Irregular expenses come up routinely and are part of a yearly cash flow plan.
Examples of irregular expenses are car and life insurance premiums, car registration, school expenses, gifts, property tax, and more. You may have other irregular expenses based on work or family needs. Go through your checkbook, indicate which months these expenses are due, add the total and divide by 12. This tells you how much of each month s paycheck needs to go into savings to cover irregular expenses. One last category of savings is for future purchases.