The 2×2 System is where you set aside two hours on the calendar two times a month to complete a predetermined financial task. This modest but consistent effort can help you sustain financial health and build wealth in bite-sized chunks. To view August’s blog covering end-of-year holiday expenses, click here. We hope you find this month’s information on calculating your net worth and understanding your insurance needs helpful.
Session 1: Calculate your net worth.
With so many moving parts in personal finance, it can be challenging to know where you stand. By calculating your net worth at least once a year, you can get a snapshot of your progress and better identify areas that might need some work. Calculating your net worth is simple. First, list all your assets, such as your checking and saving accounts, investment accounts, 401(k) balance, and values of your home or real estate and automobiles. Next, list all your debts, including mortgage, credit cards, student loans, auto loans, and other debts. Finally, subtract all your debts from all you owe to determine your net worth. Use this net worth form to get started.
TIP: As you enter your retirement funds in your net worth calculation, take a moment to consider if there might be money out there you aren’t factoring in. Reach out to former employers or use one of the websites designed to track down old 401(k) accounts to see if you can add some heft to your nest egg numbers. Also, be sure you know where all your CDs are. In the hunt for high rates, many people opened CDs at different banks and credit unions. As these mature, consider consolidating them at one financial institution. Your Credit Union offers a range of Certificates with industry-leading yields, including our new Limited Time 3-Month and Limited Time 6-Month Certificates, each paying 4.25% APY*. Plus, having all your certificates under one roof makes it easier to keep track of them.
Session 2: Understand your insurance needs.
With time comes change, and with change comes a need to update your insurance coverage. Review your choices for each of the following to make sure they provide the security you’re looking for:
• Health
• Disability
• Life
• Auto
• Liability
• Homeowners/Renters
Tip: Natural disasters nationwide have caused significant changes across the insurance industry. As with all types of accounts, it makes good sense to check at least annually for better deals and to ensure you understand what your insurer covers and what they don’t. Shopping around on insurance could save you thousands of dollars per year. Bundling your auto and home insurance under one provider can save you money. Raising your deductibles can lower your premiums. Shop for insurance before you buy a new or used car. Different cars have different rates. You might find your dream car costs far more to insure than your second choice. Make sure you have the protection you need and are not paying for coverage that isn’t necessary, such as a rider for jewelry, if you have none of financial value in your home.
Final thoughts.
We hope these tips help you take control of your finances as we enter the latter part of the year. Knowing your net worth and insurance coverage and costs can set you up to make sound decisions today and down the road.
This article was developed in partnership with our friends at Balance Pro.
*APR = Annual Percentage Rate. APR is the annual rate of interest that is paid on an investment, without taking into account the compounding interest within that year. Rates are subject to change at any time. Not available for IRA certificates
