If you’ve taken on the task of mapping out your annual financial plan, you deserve a pat on the back. Ensuring that you’ve covered all of the bases is important to both your short- and long-term financial health.
Keeping track of your progress with an annual financial planning checklist makes it easier to see which tasks have been completed and which ones you still need to tackle.
Annual Financial Planning Checklist
Now that you know what an annual financial plan is and how to make one, let’s recap the most important steps in the process. Check off each step that you’ve considered, even if your response was, “No, I don’t want to refinance my mortgage” Or, “My credit cards are already paid off!” The idea is to make sure you’ve looked at the issue. But you do need to cover every item in our first section so that you have a full financial inventory.
✔ Create your personal financial inventory
Your personal financial inventory is important because it gives you a snapshot of how healthy your bottom line is. (For more, check out The Importance of Making an Annual Financial Plan.) This annual self-check should include:
☐ A list of assets, including items like your emergency fund, retirement accounts, other investment and savings accounts, real estate equity, education savings, etc. Any valuable jewelry, such as an engagement ring, belongs here, too.
☐ A list of debts, including your mortgage, student loans, credit cards and other loans
☐ A calculation of your credit utilization ratio, which is the amount of debt you have versus your total credit limit
☐ Your credit report and score
☐ A review of the fees you’re paying to a financial advisor, if any, and the services he or she provides
✔ Set financial goals
Once you have a personal financial inventory completed (see the video Why Create a Financial Inventory? for key insights), you can move on to setting goals for the year ahead. Your goals will be short-term, mid-term and long-term.
Among your short-term goals might be to:
☐ Establish a budget.
☐ Create an emergency fund or increase your emergency fund savings.
☐ Pay off credit cards.
Your mid-term goals might include:
☐ Get life insurance and disability-income insurance.
☐ Think about your dreams, such as buying a first home or vacation home, renovating, moving – or saving so that you’ll have money to have a family or to send children or grandchildren to college.
Then review your long-term goals, including:
☐ Determine how much of a nest egg you’ll need to save for a comfortable retirement.
☐ Figure out how to increase your retirement savings.
✔ Focus on the family
If you’re married, there are certain things that you and your spouse should be thinking about on the financial front. These are some of the items that may be on your punch list:
☐ If you have children, determine how much you’ll need to save for future college expenses.
☐ Choose the right college savings account (read also: Using 529 Plans to Save for College).
☐ If you are caring for elderly parents, investigate whether long-term care insurance or life insurance can help.
☐ Purchase life insurance for yourself and your spouse.
☐ Start to plan how you and your spouse will time your retirement, including your Social Security claiming strategy.
✔ Review your retirement savings plans
Saving for retirement in an individual retirement account (IRA) or 401(k) is a smart way to enjoy some tax advantages. As you put together your annual financial plan, you should consider whether you need to:
☐ Decide whether a Roth…