The beginning of a new year is always a wonderful opportunity to look back at how we handled our finances in the prior year and to assess where we want to go. To stay on track with your goals, you need to assess if your goals from last year were effective or if they need to be tweaked in the coming year. Below is a checklist for you to assess ten different areas that impact your overall financial outlook.
• Assess the budget you had for last year. Did you meet your budget? Was it realistic? Are there things that you could do without and use for savings or future planning?
• Reset your budget in line with your discovery and track your spending at a consistent time each week so you stay on target with your goals.
• View this article for a budget checkup.
Savings and Investments Assessment:
• One of the best ways to save is to curb spending. Recurring subscriptions and unnecessary impulsive spending are a great opportunity to save instead.
• Assess the performance of your portfolio and discuss with your advisor if any changes would be beneficial.
• Check out this article to see where some hidden savings might be found that could be better used.
Financial Goals Assessment:
• Hope is not a plan, and goals will not become a reality unless they are reviewed periodically. An annual review gives the big picture, but reviewing your goals quarterly helps you to see if you are making progress toward your goals.
• Set goals that are time-bound and specific. Otherwise, you are essentially not setting goals but wishes instead.
• Set goals for today and for years to come that are flexible enough to incorporate life changes. Reassess your short-term and long-term financial goals quarterly. View this checklist for some ideas for a personal finance calendar.
Emergency Fund Assessment:
• How much is enough? No one counts on emergencies, but they happen to everyone. Read this article to help you ensure you have enough for whatever emergency may come your way.
• Have an emergency fund that covers 3-6 months’ worth of living expenses.
• If you are still recovering from emergencies from the prior year, plan to have more cushion in your budget so you are better prepared this year.
• Review your outstanding debts, including credit cards, loans, and mortgages. Pay down high-interest debt first.
• Consolidating debt may save you a significant amount of money, especially if you are able to get a lower interest rate. Set a plan in place so you can be free from debt.
• Not all debts are created equal. Sometimes debt isn't due to poor decisions on your part. Emergencies or education are a part of life. Read this article to help you strategize how to navigate Student Loan Debt.
• Assess if your current retirement goals are tracking with your plan.
• Check the status of your retirement accounts (401k, IRA, etc.). Read this article to see the typical portfolio for retirement goals.
• Adjust your retirement savings strategy based on changes in income or future goals.
• Do you have adequate insurance coverage? Insurance planning should incorporate insurance needs that are required and needed now, as well as planning for future anticipated insurance needs.
• Review your insurance policies, including health, life, auto, and property insurance.
• Read this article to assess what types of insurance you may need.
Tax Planning and Charitable Giving Assessment:
• Schedule an annual review with your advisor to make sure you are up to date on any changes in tax laws that may affect your financial situation.
• View this article to know your tax bracket and this article on how to make the tax code work for you.
• Maximize contributions to tax-advantaged accounts. Consider your charitable contributions and make adjustments based on your financial capacity.
Estate Planning Assessment:
• Are you prepared to take care of loved ones? Estate planning is for everyone.
• Read this article, review and update your will, power of attorney, and any other estate planning documents.
• Ensure your beneficiaries are current on retirement accounts and insurance policies.
• Review your current health insurance coverage from this past year and assess if any changes are needed for the current year.
• Contribute to health savings accounts (HSAs) or flexible spending accounts (FSAs) if applicable.
• Use this calculator to determine what kind of long-term care you may need. Planning now for future healthcare needs can help to protect your assets for other life planning.
I hope this assessment has helped you to gain confidence and clarity for the coming year. May God bless you as you seek to faithfully steward what He has given to you. Regular financial assessments are critical to maintaining a healthy financial outlook. Adjustments and realignment of your financial strategy may be necessary based on changes in your life or the economy. If you’re uncertain about any aspect of your finances, please feel free to reach out to us.
Yours for Faithful Stewardship,
Jeff Rogers, CEP®, CKA®
Founder & Chairman
This is meant for educational purposes only, and should not be considered investment advice or a recommendation to take a particular course of action.