How to Conduct a Personal Financial Health Check

Managing your finances isn’t just about paying bills on time or checking your bank balance occasionally. Just like your physical wellbeing, your money habits and financial position deserve regular review. Conducting a personal financial health check allows you to identify risks, uncover opportunities, and make confident, informed decisions about your future.

Whether you’re saving for a home, planning a family, building investments or simply trying to regain control after a tough financial period, a structured financial check-in can provide clarity and direction.

Why a Personal Financial Health Check Matters

Many Australians operate on financial autopilot. Income comes in, expenses go out, and as long as nothing dramatic happens, things feel “fine”. But without intentional review, small inefficiencies can snowball into long-term financial strain.

A financial health check helps you:

Understand where your money is actually going

Identify unnecessary spending or hidden fees

Assess debt levels and repayment structures

Evaluate your credit standing

Set realistic short- and long-term goals

Reduce financial stress

Importantly, if you’ve experienced financial setbacks, this process also helps you identify tools and products that suit your current situation — including options such as a credit card for bad credit rating, which may assist in rebuilding your credit profile when used responsibly.

Let’s break down how to conduct a thorough and practical personal financial health check.

Step 1: Review Your Income and Cash Flow

Start with the basics: how much money is coming in, and how much is going out?

Calculate Your Net Income

List all income sources:

Salary or wages (after tax)

Business income

Rental income

Government payments

Investment income

Your focus should be on net income — what actually lands in your bank account.

Track Your Expenses

Divide expenses into three categories:

Fixed expenses – rent or mortgage, utilities, insurance, loan repayments

Variable expenses – groceries, fuel, dining out, entertainment

Irregular expenses – car registration, school fees, holidays, annual subscriptions

Review at least three months of bank and credit card statements. Patterns will quickly emerge.

Ask yourself:

Are there subscriptions I no longer use?

Have lifestyle expenses crept up?

Am I consistently spending more than I earn?

A healthy financial position generally means your expenses are comfortably below your income, leaving room for savings and investments.

Step 2: Assess Your Debt Position

Not all debt is equal. Some debt (like a mortgage or business loan) can be strategic. Other debt — particularly high-interest consumer debt — can hinder progress.

List All Debts

For each debt, record:

Outstanding balance

Interest rate

Minimum repayment

Loan term

Pay particular attention to high-interest products such as credit cards or personal loans.

Evaluate Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio compares total debt repayments to your gross income. Lenders often use this metric to assess risk, but it’s also useful personally.

If a large portion of your income goes toward debt servicing, you may need to prioritise repayments or restructure obligations.

Consider:

Consolidating high-interest debt

Negotiating better interest rates

Refinancing where appropriate

The goal is to reduce interest costs and free up cash flow.

Step 3: Check Your Credit Report

Your credit score plays a significant role in financial opportunities — from home loans to mobile phone plans.

In Australia, you’re entitled to a free credit report from major credit reporting bodies such as Equifax, illion, or Experian.

What to Look For:

Accuracy of personal details

Open accounts you no longer use

Missed payment records

Defaults or court judgements

Identity fraud indicators

If you notice inaccuracies, dispute them immediately.

If your score is lower than you’d like, don’t panic. Improving your credit profile takes time but is achievable through consistent, responsible financial behaviour — including making repayments on time and maintaining low credit utilisation.

Step 4: Build or Review Your Emergency Fund

A strong emergency buffer is one of the most powerful indicators of financial health.

Financial planners often recommend:

At least 3 months of living expenses for stable employment

6 months or more if self-employed or in variable income roles

If you don’t yet have an emergency fund:

Start small. Even $1,000 can prevent reliance on high-interest debt.

Automate savings transfers.

Store funds in a separate high-interest savings account.

This fund acts as protection against unexpected expenses such as medical bills, car repairs, or temporary job loss.

Step 5: Evaluate Your Savings and Investments

Once your cash flow and debt are under control, review your wealth-building strategy.

Ask Yourself:

Am I contributing regularly to savings?

Do I have clear short-term goals (travel, renovations, car)?

Am I investing for long-term growth?

Am I maximising superannuation contributions where appropriate?

Look at your asset allocation:

Cash

Property

Managed funds

Superannuation

Ensure your investments align with your risk tolerance, age, and financial goals.

Step 6: Review Insurance Coverage

Financial health isn’t only about growth — it’s about protection.

Consider whether you have adequate:

Health insurance

Income protection insurance

Life insurance

Total and permanent disability (TPD) cover

Home and contents insurance

Without sufficient coverage, one unexpected event can undo years of financial progress.

Step 7: Clarify Your Financial Goals

A financial health check should end with direction.

Break your goals into:

Short-Term (0–2 years)

Pay off a specific debt

Build emergency savings

Save for travel or a car

Medium-Term (2–5 years)

Home deposit

Business expansion

Investment portfolio growth

Long-Term (5+ years)

Mortgage freedom

Retirement planning

Passive income streams

Attach measurable numbers and timelines to each goal. Vague aspirations rarely translate into action.

Step 8: Create an Action Plan

Knowledge without action changes nothing.

After reviewing your finances:

Identify 2–3 immediate improvements

Set calendar reminders for quarterly reviews

Automate savings and debt repayments

Seek professional advice if needed

If your financial situation feels complex or overwhelming, consulting a financial adviser or mortgage broker may provide clarity and structure.

Common Warning Signs of Poor Financial Health

During your review, be alert for red flags:

Living paycheque to paycheque

Frequently using credit to cover essentials

Ignoring bills or avoiding account statements

No savings buffer

High interest debt with no reduction strategy

Recognising these signs early allows you to intervene before financial stress escalates.

How Often Should You Conduct a Financial Health Check?

Ideally:

Quarterly light reviews (cash flow and debt)

Annual comprehensive review (investments, super, insurance, credit report)

Major life events — marriage, divorce, new job, new baby, business launch — also warrant a full reassessment.

Final Thoughts

Your financial health isn’t defined by how much you earn — it’s defined by how well you manage what you have.

A structured personal financial health check provides clarity, confidence, and control. It empowers you to make proactive decisions instead of reactive ones. By reviewing your income, expenses, debts, credit profile, savings, investments, and protection strategies, you build a financial foundation that supports both stability and growth.

Start today. Even a one-hour review can uncover insights that reshape your financial future.