Personal Finance

Your Annual Financial Checklist

Financial Checklist

January 23, 2023

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The thing about managing your finances is that you will rarely be able to mark something off your financial checklist and never look back. It will require your attention on an ongoing basis.

Why? Because our lives change constantly. Our income, marital status, children, death of a loved one, residency, employment, etc. will change consistently throughout our lives.

We also mature. Our interests, our needs, and our goals evolve continually which requires us to reevaluate and revisit our financial circumstances and financial plans on an annual basis, at a minimum.

Despite how much income or what your net worth is, it is imperative that you take the time to intentionally engage in your financial life. You will only benefit by creating goals, assessing and reevaluating financial decisions, and updating financial plans continually throughout your life.

See below for 10 ways you can proactively engage in your financial life throughout the year by checking these off your financial checklist.


10 Items to Check Off Your Financial Checklist on an Annual Basis


1. Revisit Your Contributions

Retirement Accounts: If you contribute a percentage of your income to your employer-provided retirement account or are contributing to an IRA, consider revisiting what you are contributing on an annual basis and ask yourself some thought-provoking questions like, Do I have room to contribute more? If I receive a bonus this year, what percentage will go to my retirement account? What would my paycheck look like if I chose to contribute 1, 2, or 3% more? 

Taxable Investment Accounts: If you max out your retirement accounts and/or are contributing to a taxable investment account, each year revisit how much you are actively investing every month. Try to commit to a number that is both feasible and manageable for you to sustain throughout the year and then increase it annually. 

2. Look into Your Withholding

Every January, revisit your withholding from your paycheck. If you had a change in circumstances or will be in the upcoming year, then it may be time to reevaluate your withholding.

A change in circumstances would include getting married, divorced, having children, switching jobs, a move to a different state, etc. these are all changes that would have an impact on your taxes.  

3. Review Your Wishes for Your Assets

Update beneficiaries, a will, a trust, and medical and financial power of attorney, and ensure that you have documented or communicated your wishes for your assets.

Many of us don’t plan for things like this because we either don’t believe it will happen to us any time soon or simply don’t want to entertain the idea of it happening.

But imagine unexpectedly losing your life or becoming incapacitated and the assets you worked so hard for went somewhere or to someone you didn’t intend them to.

That is a very hard pill to swallow and can be avoided if you document your wishes – no matter how much or how little assets you may have. 

4. Create 3 Short-Term Financial Goals for the Next 12 Months

Documenting your short-term goals provides a sense of direction and holds you accountable for the things you are trying to achieve.

Financial goals don’t always have to be associated with investing more or paying off more debt (although those are great goals too). They can be tied to experiences, family vacations, or spending challenges. For example, I’d like to save $3,000 to go on an all-inclusive trip with my significant other. I’d like to save $1,000 for Christmas next year. I commit to limiting myself to $100 per Target visit (is that possible?)…

Whatever it is, be proactive in identifying what you want. Be intentional, and specific, and create a game plan for how you will achieve it.

5. Review All Utilities and Bills for Reasonableness

We are the subscription-happy generation. Netflix, Apple, Hulu, Amazon, etc. Although many of these subscriptions are insignificant in value by themselves, they all can add up to be very significant amounts together.

Revisit your subscriptions, your bills, and utilities and identify if they are needed, reasonable in price, or if is it time to shop around or cancel. Little amounts add up over time and it’s important to review their impact on an annual basis.

6. Create a Spending Plan

You must first understand where your money is going before you can make changes to your financial life. By building awareness around where your money is going, you can create a reasonable and sustainable spending plan that will provide you the opportunity to spend intentionally today and save thoughtfully for tomorrow.

7. Review Your Investment Strategy & Asset Allocation

Put eyes on your investment account. Despite your level of expertise in this area, take a look at what you are invested in. Ensure that it aligns with your risk tolerance, time horizon and long-term financial goals.

Do a little research and try to understand its strategy and purpose. If you are unclear, uncomfortable, or unsure about how you are invested and if it makes sense for you, I encourage you to schedule a call and engage with a financial professional to help walk you through your investment allocation or to create an investment allocation that would be appropriate for you.

8. Assess Debt

Create a list of your outstanding debt, the balances, the terms of the loan, and their corresponding interest rates. Assess if it makes sense to consolidate debt, refinance the debt or accelerate a specific loan payoff due to high-interest rates.

Debt has a slow creep effect on the lives of many. It slowly will wreak havoc on your finances and your lifestyle and you must have a game plan for paying it down. Debt or leverage can be a helpful tool to build wealth, but consumer debt, high interest debt or debt used irresponsibly can cause financial ruin.

9. Consolidate & Simplify

Simplicity in finances is probably the biggest and best “secret” to financial success. Keep it simple. As an individual, you do not need 10 accounts, 8 credit cards, and 5 different banking relationships. That’s enough to make anyone overwhelmed and run in the opposite direction.

What you need is a system that works for you – the more excess you have in your financial life, the more it will get out of hand and the less likely you are to manage it well, if at all.

Keep your financial life simple. Consolidate your IRAs, and old 401Ks, consolidate checking accounts, identify the credit cards that make the most sense for you and/or offer the most perks and consider committing to a financial institution or two because the more you have with them the better offerings and pricing you will receive.

10. Invest in Your Financial Education

Whether you call on a financial professional, purchase a course from a reputable, experienced professional (check out Flex Your Finances created by yours truly), read a few books or commit to listening to a financial podcast – prioritize ways to better your financial literacy.

Our financial lives are ever-changing. Invest your time and/or resources to help you optimize and manage your money today, tomorrow, and years from now. This financial checklist should help give you a head start!

Resources:

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