Your Financial Planning Checklist for the New Year
financial planning

Your Financial Planning Checklist for the New Year

How to Use an Annual Financial Plan to Stay on Top of Your Goals

A common error in financial planning is to assume that you can do it once and be finished. In truth, though, even a well-conceived plan built with the help of a financial advisor should be reviewed annually. This allows you to stay on top of what you have and have not accomplished so that you can ensure you’ve covered all the bases on both your short-term and long-term goals.

Creating an annual financial planning checklist is a useful way to track your progress, as well as to ensure you remain vigilant about making adjustments if your circumstances or your goals should change.

The Annual Financial Plan in Brief

If you aren’t currently utilizing an annual financial plan, know that it’s a useful way to take the temperature of your financial health at any given moment. It takes a variety of factors into consideration, including your assets, your earnings, how much you have in savings and checking accounts, the health of your retirement fund, and your liabilities. Think of it as a snapshot of your overall financial footing. This means it should include mortgage or rent, utility bills, and all other monthly expenses. You’ll also want to factor in your goals and what you need to accomplish them, such as tax planning or investment strategies.

How to Create Your Annual Financial Planning Checklist

January is a great time to begin mapping out what you hope to achieve financially over the next twelve months, though you can create an annual financial planning checklist at any time of year. After all, the time is always right to begin taking a more strategic approach to your finances.

Here are the most important components to include in your checklist:

Your Personal Financial Inventory

  • List all your assets, including your emergency fund, retirement accounts, investment and savings accounts, real estate equity, college education savings, and any valuable jewelry or collectibles.
  • List all your debts, including your mortgage, student loans, auto loans, personal loans or credit card debt.
  • Calculate your credit utilization ratio – your debt amount versus your total credit limit.
  • Check your credit score.
  • Review any fees you’re paying to a financial advisor or related to your investment accounts.

SEE ALSO: How to Estimate How Much You’ll Need to Retire


Life Events

Major life transitions will always influence your financial planning. Think about any upcoming milestones, such as getting married, having a child, or retiring. You should also factor in any major expenses, such as saving to buy a home or paying for your child’s college education.

Investing and Retirement Planning

It’s important to remember that saving alone is not a financial plan. While a growing savings account and a habit of contributing to it are the necessary raw materials, you need to be strategic. Review your retirement savings options and be sure you’re using them to your best advantage. Inventory the accounts you have open, what their balances are, and how your investments are performing. Not only do you need to be utilizing the most advantageous account types for your circumstances, but you also need to consider asset allocation and whether you’re comfortable with the investment fees you’re paying. If you have investments in a taxable account, you’ll need to consider tax strategy, too.

Emergency Funds

Saving for retirement is crucial at any age, but so is planning for unexpected expenses. If you don’t have an emergency savings fund with three to six months of living expenses, add this to your financial to-do list immediately.

Financial Planning Toolbox

What tools are you using to help you reach your financial goals? Examples are free budgeting apps like Mint or a paid software program. The point is to avoid a “fly by the seat of your pants” approach at all costs, so figure out what works for you. Of course, one of the best steps you can take is to find a financial advisor to help guide you toward your goals.


SEE ALSO: Questions You Must Be Able to Answer to Have a Successful Retirement


Goals for the Next Year

Your annual financial planning checklist should consider your outlook for the future. In looking at your goals, evaluate what you want to accomplish financially in the next 12 months. Get specific with amounts you need to save, and which accounts you’ll use, then determine how much you need to put aside every month. If you don’t use a monthly budget, creating one will be helpful as you look at your goals for the coming year.

Many of your goals may be related to paying down debt or saving for larger goals, but you might also add items to your list like:

  • Getting a life insurance policy
  • Looking into your disability insurance options
  • Considering long-term care insurance
  • Downsizing or upsizing your home

It can also be helpful to break your larger goals down into mini-goals that you can tackle monthly or quarterly.

Use Your Annual Financial Planning Checklist to Stay on Firm Financial Footing

Once you’ve begun using an annual financial planning checklist, you should review it at least once per year. Think of your yearly review as a financial inventory of sorts. Look through all the details mentioned above and, rather than giving it just a cursory glance, ask yourself specific questions like, “Should I refinance my mortgage?” and “Does my portfolio need to be rebalanced?”

While it may feel time-consuming to create your financial planning checklist, once you do so it will give you a tremendous advantage in staying on track to achieving your financial goals – this year and well into the future.


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