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Take Control of Your Finances With Our Financial Planning Checklist

Personal Finance
couple reviewing our financial planning checklist

Let’s face it, your personal finances affect all aspects of your life. One way to create a solid financial foundation for yourself is to work through our financial planning checklist to help make sure you are covering all your bases. Understanding the details of your financial life can potentially increase your peace of mind and offer you a greater sense of security.

The following financial checklist is intended to provide general information to help you review your finances. We understand that everyone's situation is different, so the items in the checklist are not necessarily by priority or in a specific order.

1. Create a Budget for Yourself

Know the ebb and flow of your money. The first and perhaps most important step toward a healthy financial life is creating a budget to responsibly manage your income and expenses. Budgeting apps can help you track your income and expenses to avoid overspending.

Pay Yourself First

Remember to include how much you plan to save each month in your budget. The key to saving is to pay yourself first. Setting up automatic deposits to a savings or money market account can help you stay disciplined without having to think about it. Getting into the regular habit of saving a certain amount from every paycheck can help you efficiently accumulate the wealth you need to reach your short- and long-term financial goals.

Explore How to Create a Budget

5 Questions to Help You Master Your Personal Budget
What Does a Budget Look Like?
7 Steps to Building a Retirement Budget
Back to Basics: Budgeting Tips for 30 Somethings
Back to Basics: Budgeting Tips for Your 60s

2. Build an Emergency Fund

28% of American adults have no emergency savings.
Are you financially prepared for a life emergency like an extended illness or loss of a job? According to Bankrate, 28% of American adults have no emergency savings. Establishing an emergency fund can help you sleep better at night by giving you greater peace of mind about your future, knowing that you may have set aside enough money to help you financially survive an emergency or unexpected life event. Many financial professionals suggest saving three to six months’ worth of your fixed living expenses (e.g., rent/mortgage, food costs, gas, etc.) in an emergency fund. Keeping your emergency fund liquid, in a savings or money market account, is essential because you want to have immediate access to it if you suddenly need the money.

Explore How to Get Started on Your Emergency Fund

What Is a Rainy Day Fund?
Why You May Need an Emergency Fund in Retirement
Managing Family Finances: Getting Your Spouse & Children on Board
Adulting 101: How to Financially Transition Into Adulthood
Family Financial Planning: Having the Money Talk With Aging Parents

3. Manage Your Debt

Learning how to manage your short- and long-term debt, including your credit card debt and student loans, is essential to maintaining your financial health. Examples of short-term debt could include a three-year car loan or a relatively low credit card balance that you plan to pay off within 12 months. Long-term debt includes home mortgages and student loans, which you expect to pay off over a much longer period of time, like 30 years.

Credit Card Debt

Americans carry an average of 4 credit cards and have an average credit card debt balance of $6,028.

According to Experian, Americans carry an average of four credit cards and have an average credit card debt balance of $6,028. Many people get into trouble by charging too much on their credit cards, especially if they have a large unexpected expense, such as a major car repair or unforeseen medical problem, and don’t have an emergency fund to provide the extra money. Typically, it makes better financial sense to pay down your debt with the higher interest rates first, such as credit cards, and pay the minimum for other debt such as student or automobile loans. If you are paying 18% interest on multiple credit cards, you may want to consider a debt consolidation loan to lower your interest rate, reduce the money you are paying in interest and make just one monthly payment.

Explore Ways to Help Manage Your Debt

How to Tackle Credit Card Debt for Greater Financial Health
How to Reduce Student Loan Debt & Graduate in Four Years
Managing Debt: The Good, the Bad & How It Fits In With Your Goals
Paying Off Debt Before Retirement: What to Consider Getting Off Your Financial Plate
Managing Student Loan Debt to Keep It From Managing You

4. Outline Your Financial Goals

Before you can realize your dreams, you first have to know what they are. Thinking through your financial goals and writing them down bring them one step closer to becoming reality. Your financial goals can fall into three different categories: short-term, intermediate and long-term.

Short-Term Goals

What are your immediate financial goals for the foreseeable future, within the next one to five years? For example, you may want to save money to buy a new car, splurge on a special family vacation or pursue a new sport like skiing, which involves special equipment and additional travel expenses.

Intermediate Goals

What are some things you want to accomplish within the next 10 years? These intermediate goals might include saving for a down payment on your first house, buying term life insurance after you have children or getting a graduate degree to further your career.

Long-Term Goals

Looking out even further on the horizon, where do you want to be financially in the next 20 or 30 years? You may be considering how to fund future life milestones such as downsizing your home after becoming empty nesters, retiring early, like when you reach age 60 rather than 67 or buying a second home to live in part of the year during retirement.

Taking time to plot out your short-term, intermediate and long-term financial goals can help you see the larger picture of your financial life. You may even surprise yourself along the way.

Explore More About Your Financial Goals

5 Smart Steps to Buying Your First Home
Paying Off Student Loan Debt & Buying a House: How It Is Possible
Why I Bought Term Life Insurance
Will You Save for Retirement or Your Children's College Education?
Empty Nester? Consider Shaking Up Your Financial Plan

5. Put Your Family First

Many important life milestones, like buying your first home, getting married, starting a family, changing careers or entering retirement, are not only foreseeable but also require careful planning, especially on the financial side. Other life-changing experiences, like the loss of a job or the death of a spouse, can happen suddenly and unexpectedly. So how can you financially prepare yourself and your loved ones for these various life events?

Key Questions to Consider

Did you know that more than 1 in 4 of today's 20-year-olds will be disabled before reaching retirement age?

Did you know that more than one in four of today’s 20-year-olds will be disabled before reaching retirement age? In addition, a third of all workers are concerned about becoming sick or disabled and not being able to work, yet only 20% of them have disability insurance. As you think about caring for your family, how might a disability affect their future well-being?

Here are a few important financial questions to consider:

  • Do you have disability insurance to provide for your family in case you are diagnosed with an illness or experience an accident that leaves you disabled and unable to work?
  • Do you have adequate life insurance coverage at this point in your life? Would your family be okay financially if something happened to you?
  • Would an accidental death insurance or critical illness insurance policy help provide more of a financial safety net for you and your family members?
  • How will you pay for your children’s college education?
  • Are you on track with your retirement planning? When do you and your spouse plan to retire? Have you considered an annuity to create a guaranteed stream of retirement income?

As Your Family Grows

Living is expensive, no matter what, but when you have dependents who rely on your income, you could feel this financial pressure more intensely. For example, having several kids under the age of 10 may lead to cheaper and more creative vacation plans. With more dependents, you may be pursuing new financial paths to generate extra income for your growing family, like the possibility of investing in a two-family residence to collect rental income from additional tenants.

Generational Care

You also may find yourself living in a multigenerational household, caring for an aging parent or grandparent. Preparing to financially care for your loved ones, both young and old, can create many demands on your financial resources. While nearly one-third of consumers say long-term care expenses are a top financial concern, only 15% own long-term care insurance. Effective planning for the future may involve investigating long-term care insurance coverage for you and other family members to help pay for costs associated with nursing home care, home health care and assisted living facilities down the road.

Estate Planning

Have you thought about how you want to distribute your financial resources after you’re gone? Transferring wealth to the next generation can be accomplished in different ways, including life insurance policies and trusts. You may decide to leave money to your favorite charity by naming an organization as your life insurance beneficiary. Working with an attorney can help ensure that your assets are protected and transfer according to your wishes. Important estate planning measures include creating a will, setting up any necessary trusts, getting a power of attorney (someone to make decisions on your behalf in case you are unable to) and naming a health care proxy (power of attorney for health decisions). If you are caring for aging parents or grandparents, you may need to assume estate planning responsibilities for them as well.

Explore Ways to Plan for Your Family's Future

The Sandwich Generation: A Financial Survival Guide
6 Financial Questions to Ask When Caring for Aging Parents & Grandparents
Estate Planning 101: The Basics
Retirement Planning: Will You & Your Spouse Retire at the Same Time?
What Is Disability Income Insurance & Is It Right for You?

6. Plan Now for Your Retirement

3/4 of Americans say the nation faces a retirement crisis.
According to the National Institute on Retirement Security, “In overwhelming numbers, Americans are worried about their ability to attain and sustain financial security in their older years. Three-fourths of Americans say the nation faces a retirement crisis. Some 70% say the average worker cannot save enough on their own to guarantee a secure retirement.” This research demonstrates that many Americans feel like they are not saving enough for their retirement.

No matter how old you are, it’s never too early or too late to save for your retirement. The earlier you start saving for retirement, the more you can take advantage of the power of compound interest to grow your investments.

Maximize Your Benefits

If you work for an employer, don’t let free money go to waste. Be sure to take advantage of financial benefits from your employer like 401(k) matching contributions and stock options. By maximizing your financial benefits through your employer, you are that much closer to your retirement goals.

Watch Over Your Accounts

Keep an eye on you both your employer-sponsored and individual retirement accounts. Remember your retirement portfolio requires ongoing management for proper asset allocation and rebalancing at least once a year. Evaluate the economic markets as well as your own risk tolerance and make changes accordingly. And if you leave your current employer to change jobs, consider taking your 401(k) or 403(b) retirement money with you by rolling it over to your new account with your new employer or transferring it to your own individual retirement account (IRA).

Explore How to Start Planning for Retirement

How to Start Planning for Retirement From Scratch
Not Saving for Retirement? Here's the Cost of Waiting
What's the Difference Between a 401(k) & IRA?
Types of Retirement Plans: Which Ones Apply to You?
Retirement Checkup Calculator

7. Review Your Key Financial Information Annually

As you ring in the new year with family and friends, remember to take stock of your financial life as well, especially your investment goals. Is it time to maximize your retirement account contributions by funding either a traditional or Roth IRA? Whether it’s during January or another time of year, it’s helpful to conduct an annual assessment of your credit report and score, insurance coverage and investments, especially your retirement accounts.

Check Your Credit Report

It’s a good idea to check your credit report and score at least once a year to keep track of your current creditworthiness and ensure your creditors and lenders are reporting accurate information about your financial activities. You are entitled to a free credit report every 12 months from each of the three major consumer reporting companies (Equifax, Experian and TransUnion). Visit the Consumer Financial Protection Bureau’s website to learn how to get a copy of your credit report and how to obtain your credit score. Your credit card company may provide your credit score to you for free. Be aware that your credit utilization rate or ratio — calculated by dividing your current total credit card balances by your total credit limit — can significantly affect your credit score. If your credit utilization rate is too high, it may lower your credit score.

Review Your Insurance Coverage

20% of people who already own life insurance say they don't have enough.
Evaluating your insurance coverage every year is also important. It might surprise you to know that 20% of people who already own life insurance say they do not have enough. Everyone needs health and auto insurance, but have you considered what you might need in terms of other types of financial protection, like life, disability, long-term care, critical illness and Medicare supplement insurance? In addition, be sure to review your financial beneficiaries on a regular basis to make sure they are current on your insurance policies, employer-sponsored retirement plans (such as 401(k) and 403(b) plans) and individual retirement accounts (IRAs). If you have a flexible spending account (FSA) for medical and childcare expenses through your employer, make sure to exhaust your funds so you don’t lose any accrued money at the end of the year.

Monitor Your Investments

Don’t forget to conduct a yearly assessment of your other investments as well – which might include real estate, stocks, bonds, mutual funds, index funds and exchange-traded funds (ETFs). Is it time to liquidate some of your assets to create more cash reserves? Is your retirement portfolio balanced appropriately given current market conditions and your personal risk tolerance? Investing the time to review your investment goals and evaluate your financial accounts on a regular basis and make any necessary adjustments will help keep your financial life on track by aligning your short- and long-term financial goals with the most appropriate investment vehicles.

Explore How to Review Your Finances Yearly

Personal Financial Planning: The Importance of Reviewing Your Finances Regularly
How to Conduct an End-of-Year Personal Finance Review
Is it Time to Review Your Life Insurance Needs?
Could a Diversified Portfolio Help You Reach Your Financial Goals?

8. Consult a Financial Professional

Finances can get complicated, and when they do, remember you don’t have to go it alone. Even if you consider yourself financially educated and well informed, sometimes the input of an outside professional can make all the difference. Working with a financial professional can help you clarify your financial needs and goals and find the right financial products and services, from insurance and annuities to retirement planning and investing, to fit both your budget and lifestyle.

We have experienced financial professionals eager to help you build greater financial security and explore what financial solutions are right for you.

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