How to give your money a finance health check

Regular health checks are a crucial part of everyday life, and finance is no exception. With the current cost-of-living crisis in full effect, there’s no better time to ensure you are in complete control of your outgoings. But how do you do this? What exactly is a financial health check?

To put it simply, a financial health check is a review of your personal finances. It’s time to assess your money management, understand where you stand with your financial goals, and take note of areas that need improvement or adjustment. Spending time on a financial health check can pay dividends, but it can feel hard to fit into an already busy life. The good news is that taking the time just twice a year is ideal, with the beginning and the middle making ideal checkpoints.

Why not get started now? 

We’re here to help you get started with our practical tips and advice on how to keep you on track with your next financial health check…

What is a financial health check

A financial health check is your opportunity to take a step back and get a clear, holistic view of your personal finances.

Think of it as a regular check-up for your money, designed to help you assess your current financial situation, spot areas for improvement, and set a plan to reach your financial goals. By taking advantage of a free financial health check, you can gain valuable insights into your spending habits, savings, and overall financial health.

During your financial health check, you’ll receive helpful hints and personalised advice to help you manage everyday spending, reduce debt, and boost your savings—giving you the confidence to take control of your financial future.

Understanding your finances

Getting to grips with your financial health begins with understanding your current financial situation.

This means taking a close look at your income, regular expenses, outstanding debts, and savings. Using a mobile budgeting app can make this process much easier, allowing you to track your spending, set up budgets, and monitor your progress towards your financial goals—all from your phone or tablet.

Many apps also offer personalised insights and alerts to help you stay on top of your finances and make informed decisions. If you’re looking for more tailored support, a premier banking manager or highly qualified personal banker can provide expert guidance, helping you identify opportunities to cut back on unnecessary expenses and create a plan that keeps you moving towards your goals. With the right tools and advice, you’ll be better equipped to manage your financial situation and keep your finances in good shape.

Review your spending

Though you can’t stop paying for things like your electric bill or your car insurance, you can make sure that you’re getting the best deal possible.

You can save a significant amount of money by reviewing your monthly expenses and adjusting the payment packages you already have, such as broadband, utilities, mobile, TV, and essential insurance products. Additionally, increasing payments on your credit cards or overdraft accounts can help you manage debt more effectively and improve your financial health.

With so many options available, selecting the right provider can be an overwhelming experience. To ensure you’re getting a good deal, consider using a comparison site like MoneyHub. Some platforms offer features tailored to your spending habits, helping you find the best deals that suit your needs. Breaking down the options and having a clear comparison will really help you refine your decision.

And if you own your own home, there’s another option to consider: remortgaging. Whether you’re coming to the end of your current deal, eager for a better rate or you’re worried about interest fees going up, remortgaging with a better deal could be a great way to save a nice sum of money.

Cut back where you can

Budgeting is never an easy task – but it is a necessary one.

Cutting back on non-essential spending can be one of the most effective ways to build up your savings. You can start by simply reviewing your recent transactions and prioritising what was worth spending money on and what wasn’t. Could that daily lunch out be substituted for lunch made at home? Was the impromptu shopping spree worth the additional spend, or would you rather see a healthier savings account?

It’s all about compromise.

If you combine all the unnecessary purchases, you’ll be able to calculate just how much more you could save – and you may be surprised by the result. Remember, you can make these changes at your own pace to ensure they are sustainable and fit your lifestyle.

Managing debt

A key part of any financial health check is examining your debts, including credit cards, loans, and mortgages. Managing debt effectively is essential for maintaining good financial health and reducing financial stress.

By using a free financial health check tool, you can get a clear picture of your current debt levels and receive personalized recommendations on how to tackle them. Specialist team members, such as debt advisors or highly qualified personal bankers, can work with you to create a realistic budget, prioritise your debts, and explore options for negotiating with creditors if needed.

With expert support and a structured plan, you can take control of your debt, avoid persistent debt traps, and work towards a more secure financial future.

Get ready for a rainy day

Once you’ve reviewed your spending, cut back on some non-essentials, and only if you have the means to do so, consider setting aside some savings for when the going gets tough.

A rainy-day fund can help reduce financial anxiety and act as a safety net for unexpected expenses, such as emergencies or repaying your overdraft, and ensures you’re prepared for life’s unexpected curveballs. Overwhelming overdrafts, sky-high credit card debt and high-interest loans are examples of the kind of compromising situations you could find yourself in if you don’t have some savings set aside. Without any savings, it can be all too easy to get deeper into debt.

Having a goal makes everything easier to achieve, so the first step you’ll need to take is to calculate how much you’ll need to save and deposit into a savings pot. For a rough calculation, simply add up your monthly outgoings and see how much you have left over as disposable income. Once you’ve done that, you can then realistically see how much you’ll be able to set aside each month for your rainy-day fund feasibly.

Then, simply add together all your essential outgoings and decide on a savings goal to work towards.

For example:

• Your monthly income is €1500
• Pick a goal of saving 2 months’ worth of essential expenses
• Your essential expenses are on average €1000, so your goal would be €2000
• If you add €200 to your savings pot each month, you’ll be able to reach your goal within 10 months
• You’ll still be left with €300 a month for disposable income. If you’re also planning for trips, check out these holiday savings tips to make your next holiday more affordable.

Keeping good financial health

We’ve already detailed the effectiveness of setting a savings target, plus monitoring your spending – but what other ways can you keep good financial health?

• Become transfer happy on payday. The best time to transfer money into your savings account is when your bank balance is at its healthiest, so payday is the best day of the month to reshuffle your finances. Don’t let the extra money that could go into your savings account linger in your current account too long – detaching yourself from it as soon as possible will help deter you from spending it.
• Is your Amazon Prime Video subscription used only a startling once a month in comparison to your daily Netflix binge? Cancel unused subscriptions or reduce the quantity you pay for.
• If possible, pay off any outstanding loans/credit card debts. By doing so on time, you’ll reduce your risk of getting into further debt and allow your credit rating to remain stable, or even improve.
• Download a mobile budget app – it’s the easiest way to have visibility of your finances daily. Many apps are available for both Android devices and compatible iOS, ensuring accessibility across platforms. With so many bank mobile budget apps available, it’s essential to choose one that actively helps you save with useful budgeting features. A perfect example of this would be Bilance’s app. From tagging and tracking transactions to creating budgets for controlling your spending to setting up balance and transaction alerts, you have a host of options at your disposal that help ensure your financial health remains stable.

What to do in financial hardship

Things don’t always go to plan, and if you find yourself struggling after your financial health check, don’t give up hope – there are things that you can do to help ease your struggles:

• Jot down your financial commitments in order of priority and review your spending – what is absolutely essential and what can be cut down even further?
• Steer clear of loans and try not to use credit cards frequently – if you’re struggling, you can end up falling into a bad spiral of debt if you continuously use these as ill-perceived safety nets.
• Know what you’re entitled to – you may be eligible for various benefits from the government, even if you work.
• Speak to a debt advisor – debt experts will be able to provide you with personalised advice for your situation. There are several reputable services for you to decide on, including the Tallinn city government.