Video: How To Do Your Own Annual Financial Review

Just like we should all see our doctors for our annual physical exams, we should also do a review of our personal finances at least once per year. No shots! I promise. To make it easier, we have some how-videos, a financial template, and links to online calculators that you can use.

Here is a link to the Personal Financial Review Template

Watch it on YouTube: How to do your own Annual Financial Review

Subscribe to our A in Finance YouTube channel too.

Your Personal Financial Report Card

For our financial checkup, we want to accomplish three things:

  1. Get a snapshot of your current financial situation (your personal balance sheet of assets and liabilities to calculate your net worth).
  2. Use easy online calculators to check if you are on track with your retirement.
  3. Use easy online calculators to check if you are on track with your college savings for your kids.

We can think of these three items, collectively, as your personal financial report card for the year. This is by no means an end-all-be-all to your personal finances. It is really just a good first step to start getting your head wrapped around what you have and on what trajectory you are. That being said, we are not going to focus on the returns on your investments. That’s a topic that requires its own separate and more in-depth analysis. We are also not going to focus on making your monthly budget. Again, this will require more of your own personal attention on your bottom line. However, with your financial report card, you can then start to plan and adjust your monthly budgeting to move you toward your goals for the year and longer-term.

I’ve created a financial template and a how-to video so you can easily do this annual review yourself. In the video we will give a brief overview of the template and point out some key items and tips so it’s easier for you to fill out. We will then walk you through some of retirement and college savings online calculators so it’s super-easy.

Your Personal Balance Sheet

Your personal balance sheet is a snapshot of your assets and liabilities. All we are doing is 1) adding all of your assets (e.g., checking, savings, CDs, investments, 401K, IRAs, college savings plans, etc.), 2) adding all of your liabilities (e.g., mortgage, car loans, credit cards, student loans, and other debts), and then 3) taking the difference between the two to calculate your net worth. We want your assets and net worth to go up over time.

There are some online net worth “calculators” that show how your net worth might rank against other people of a similar age and/or income. If you are curious and it might help motivate you to get your financial house in order, here are a few net worth calculators: a simple one from CNN (enter age and income) and a more detailed one from Bankrate (enter in your balance sheet details). Personally, I don’t pay attention to these; the only thing I care about is if I have enough for my family, so it doesn’t really matter what other people might or might not have. And whether you have enough is what we get to in the next couple sections on retirement and college savings.

Are You on Track for Retirement?

We can check your retirement pretty easily using some available retirement calculators and the information you collected in your financial template. There are plenty of good retirement calculators available online. There are some like this CNN retirement calculator that are super simple (you only input your age, current savings, and current income), and others, like BankrateSchwab, and American Funds, that have more inputs for a more tailored picture. Since we’ve collected a lot of the information already in our financial template (and they don’t take much more time anyways), we should use one of the latter. I like the Bankrate calculator for running a bunch of different scenarios as we suggest below.

All of these calculators have some underlying “modeling” assumptions on rates of return, the income you’ll need in the retirement, etc. These are biased toward an average and use some simple metrics. It’s always more accurate to work out your actual estimates, but it takes a lot more time to do this. To keep it simple, we can use another approach to help you triangulate; we can create a range of outcomes by running a few quick scenarios. Most of these online calculators make it super easy to change a few assumptions and run different scenarios. Then all you have to do it just print them out.

The biggest drivers for the retirement calculation are the number of years in retirement (life expectancy) and your income needs in retirement (usually estimated as % of current income). Many of these calculators may assume you live until age 90 or 92 and may require 80-85% of you current income. So, a range of scenarios like this might make sense:

  • Pessimistic Case (30 yrs in retirement and 90% of current income)
  • Base Case (25 yrs in retirement and 85% of current income)
  • Optimistic Case (20 yrs in retirement and 80% of current income)

You also run a few scenarios by making adjustments to your annual savings (something you have control over) so you can see the impact.

The calculator will create your retirement report and give you an estimate of how much money you will need when you retire, how much you are on track to have when you retire, a surplus (hopefully) or a shortfall, and how much more you need to save to achieve your retirement target. With this, you can start taking the necessary actions toward your retirement savings.

As you reevaluate and refine your financial plans, you may want to make further adjustments to fit your personal situation. Here’s a primer for some issues related to retirement modeling assumptions, “6 Things Retirement Calculators Get Wrong”.

Note: Most of these calculators will automatically estimate your Social Security benefits based on your current income. If you want to be more accurate, find your statement from the Social Security Administration or use their SSA’s Quick Calculator (you don’t need to access any personal records). The SSA has other more accurate estimators, but those may require you sign in to access to your personal records.

Is Your College Fund on Track for Your Kids?

Like the retirement calculator, but even easier, we can check your college funding using some available college savings calculators and the information you collected in your financial template.

There are lots of online calculators (just google it). I like the Bankrate College Savings calculator because it is easy to change assumptions, print reports, and it also allows you to add additional children to your scenario.

As with the retirement calculator, the college savings calculator has a few key underlying assumptions that you want to consider adjusting. Here are some comments on key inputs and assumptions.

  • Current savings for college. Input the amount you collected in your personal finance template.
  • Cost of college. The Bankrate calculator has a table of costs for the average 4-Yr public (in-state and out-of-state) and private schools. But if you have a few specific colleges, the CNN college cost finder is really good. The CNN finder shows an all in cost (not just tuition, room and board, but also some school living expenses). The other cool feature is that you can estimate your costs after financial aid based on your household income.
  • Cost of college inflation rate. I would tend to keep the default rate here. I’ve seen it as 4-5% in most calculators.
  • Rate of return on your investments. If you have a 529 college savings plan, you should take a look at the returns for the investment options you are in. A lot of these plans have age-based investment options that are more aggressive while your child is young, but move to a more conservative mix as she gets closer to college age. If your child is older, you might want to use a more conservative rate of return for the calculator.

Like the retirement calculator, the college savings calculator will show you if you are on track and if and how much more you need to save to achieve your college savings target. With this, you can start taking the necessary actions for your kids college savings plan.


Anyways, that’s it. See. No shots. Now you have your own personal financial checkup and next year will be much easier since it will be just a simple update. Another benefit of doing this checkup is that you will be more prepared for your taxes. You can have a better idea of your situation and can ask your tax advisor for some tax moves you might consider for the upcoming year. If you have a financial planner, you’ll be able to better understand the rationale behind his/her recommendations.

Tips and next steps:

  • Review your financial review with your spouse and come up with your goals and action plan for the year. Tip: make concrete goals (e.g., reduce debt by $5,000).
  • Involve your kids. Talk to them about some of the items, like your college savings plan. Maybe they can contribute a little too.
  • Make auto pay/transfer your friend. Schedule automatic payments to your retirement and college savings accounts to keep you on track.

Now put a recurring appointment in your Outlook or Google calendar so you don’t forget to do this again next year.


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