What an annual financial review is (and isn't)
An annual financial review is a fixed-format audit run once a year — typically the first week of January — that walks the entire household balance sheet end-to-end in a single sitting. It is not the same as the quarterly trajectory review (which only covers active goals) or daily app checks (which only cover balances). The annual review is the only routine that touches insurance, beneficiaries, credit reports, and tax-strategy decisions, which is why skipping it costs more than any other missed check-in.
The ten-checkpoint checklist
- Net worth: list every asset and every liability, compute net worth, compare to last year's number.
- Cash flow: pull total annual income and total annual spending from bank/card statements; compute savings rate.
- Goals: score each goal green/yellow/red; close hit goals, re-quote drifting ones, retire stale ones.
- Debt: list every balance, APR, and payoff date; identify any refinance or balance-transfer opportunities.
- Investments: review asset allocation vs target; rebalance if any sleeve drifted more than 5pp.
- Retirement contributions: confirm 401(k) deferral rate and Roth IRA contributions captured the full match and the annual limit.
- Insurance: review coverage for health, auto, home/renters, disability, life, umbrella; check for life changes (marriage, kids, new home).
- Credit: pull all three free reports from AnnualCreditReport.com; dispute any errors; note the credit score trend.
- Taxes: project this year's effective rate; identify HSA, FSA, charitable, and tax-loss-harvest opportunities before December.
- Beneficiaries and will: confirm beneficiary designations on every retirement and insurance account; update will if life changed.
How to run the review in 90 minutes
Net worth year-over-year is the headline number
Every other checkpoint feeds the same underlying metric: did your net worth move in the right direction over 12 months? A household where net worth grew faster than gross income that year is structurally winning. A household where net worth grew slower than income is leaking — usually through housing, vehicles, or lifestyle. Net-worth growth slower than zero is a red flag that requires action this quarter, not next December.
What to actually do with each colour
- Green checkpoints: leave them alone. Resist the urge to optimise; the time is better spent on yellows and reds.
- Yellow checkpoints: pick one corrective action and schedule it before the end of January.
- Red checkpoints: solve them this quarter, not 'someday'. A red on insurance or beneficiaries is a household-survival issue, not a financial nicety.
When to involve a fee-only fiduciary planner
If your annual review reveals red on three or more checkpoints, or your situation changed materially (marriage, divorce, inheritance, retirement within 5 years), book a one-time engagement with a fee-only fiduciary via NAPFA or the XY Planning Network. The $1,500–$3,500 fee for a comprehensive plan is paid back many times over by avoiding even one major mistake — wrong beneficiary, wrong tax election, wrong insurance product.
