How to improve your financial well-being with a personal finance audit 

Financial well-being, or financial wellness, refers to your overall financial health. It includes things like habits, planning, mindset, and goals. The idea is that you have control over your finances, you know what you’re doing and where you’re going, and you’re practicing great money habits so you can live the life you want to live. 

Financial well-being is a journey and is something that must be regularly maintained. No matter where you are in your journey, it’s important to stay engaged with your personal finances to continue to improve this part of your well-being. 

So, we’ve developed this audit to serve as a checklist and help you decide what, if anything, should change in your financial plan.   

Here are a few questions you’ll want to ask yourself during your financial well-being audit: 

1. What is your net worth? 

Your net worth is the combination of what you own (assets, like cash and investments) and what you owe (liabilities, like debt). It shows a balanced picture of your financial situation. 

To find your net worth, tally up your cash, savings, investments, property (like houses or condos), and cars to see your assets. Then, total all your debt, whether it’s from student loans, credit cards, or personal loans. The difference is your net worth, and if you’re looking to improve your financial well-being, one of your goals may be to increase it. 

2. What are your financial habits and goals? 

You probably know how much you make. But how much do you spend weekly?  Or want to save for retirement? Or need to deduct from your paycheck to land your employer’s retirement match? Do these activities match your budget? 

Actual numbers will help you understand what actions you need to take, so take a deep dive through your financial statements (bank, brokerage, credit card, etc.) to discover your financial habits. Then, review your financial goals to make sure they’re still what you want. 

3. Where are your assets? 

This includes considering your stocks, ETFs, and retirement plans like 401ks or IRAs. You’ll want to make a list of all your accounts. This will help you see the full picture when it comes to your current finances. 
If you have multiple accounts, you may consider consolidating them to make money management easier.

4. Do your investments align with your mindset and values? 

You’ll want to consider your risk tolerance, mindset, time horizon, goals, and personal values.  

When it comes to values, ask yourself: are the companies you invested in worried about their environmental or social impact? If so, how does that sit with you? Does this matter in your strategy? 

Over the past few years, socially responsible investing has become a popular strategy for investors who want to grow their wealth but don’t want their money to support corporations that do not align with their values. 

And it’s not just about the specific stocks and ETFs—the tools matter too. With M1, you can build a custom collection of sustainable or socially responsible investments without the manual calculations or fees (we call them Pies), or choose pre-made Pies built by the M1 team.

5. Have you had any big expenses or acquired any debt?  

Is there anything new to take into consideration when re-evaluating your budget? New student loans? New medical or credit card bills? A new house? A new car? 

Each line of credit has unique terms. The limits may range from a few thousand to a few hundred thousand dollars, and repayment plans may impact your budget. 

6. Are you taking advantage of automation?  

At the least, financially responsible people: 

1. Live below their means. 
2. Build an emergency savings fund. 
3. Pay off high-interest loans. 
4. Contribute to a retirement account. 
5. Contribute to a well-diversified long-term portfolio. 

But these steps are separate and often clunky. Many personal finance platforms let you automate (to a certain extent). You may even do this now with a recurring transfer or two on M1. 

Double check your bank accounts, credit cards, and brokerage accounts for automation options like autopay, recurring transfers, auto-invest, or even Smart Transfers. Automation can save you time and energy, letting you focus on your strategy and living your life the way you want. 

7. Are you maximizing your compensation?  

We don’t just mean base salary when we talk about compensation—though doing a little salary research and negotiation if you’re below market value doesn’t hurt. A less obvious example of maximizing your compensation is any 401(k) or IRA match. Make sure you’re meeting any requirements for getting the match. It’s free money for your future! 

Plus, many employers provide benefits that employees pay for in one way or another: dental insurance, healthcare FSA, etc. Check with your employer to make sure you’re taking advantage of any benefits available and helpful to you.  

Audit your financial well-being 

Many investors ask themselves these questions quarterly or annually and adjust their finances as needed. Think of it like an annual checkup at the doctor’s office. This way, it’s not about failing or making a poor investing decision. It’s about improving your long-term strategy each time you adjust 

It’s not always easy to make financial choices to set yourself up for future success, but it gets easier when you take stock of your current situation and build a plan that helps you reach your goals.