Just like you keep a list of monthly house cleaning tasks or the steps needed to complete a project at work–you need to keep a financial checklist.
Because you have goals. And those goals require money.
To help you achieve those goals, I’ve created this financial checklist that you can use to make sure you are set up for financial success and growth in the year ahead.
Onward and upward.
10 Step Annual Financial Checklist
Completing the following ten steps will get you re-ground in your goals and primed and ready to take on 2024.
And even if a step in the financial checklist may not at first seem relevant to your personal financial situation, give it a brief skim. Just in case. You don’t want to overlook something that could cost you thousands down the line.
1. Complete a personal finance inventory
The first step is to collect your personal finance information in one place. This will make the remainder of the list a breeze to complete.
Here’s what you’ll want to pull together as of twelve months ago and today:
- Outstanding debt, including balances and interest rates
- Savings account balance
- Checking account balances
- Investment account balances (including retirement saving and brokerage accounts)
- 401k contributions made during the year
- Real estate values
- Net worth
- Ratio of debt to assets
Now, before we move on to more quantitative steps, take a moment to reflect on the progress you made toward your goals over the past year.
- What was the state of my finances at the beginning of the year, and where are they now? Did I pay down debt? Increase my savings? Take on more credit card debt?
- What am I most proud of?
Celebrate these achievements! This will help you develop a growth mindset to crush your 2024 financial goals.
Nervous about taking a peek at your finances for the year? I got you –> 5 Money Mindset Shifts To Move From Scarcity to Flourishing
2. Check on your emergency fund
Unexpected expenses can derail your financial stability, setting you back on your goals (especially if those involve jumping from your day job to grow your business!).
And unfortunately, unexpected expenses are not a rare occurrence.
In a survey of over 4,000 U.S. consumers, 46% reported facing one or more financial emergencies over the previous 90 days.
And if you lose your job? It takes 5-6 months to find a new one, yet 5-6 months of living expenses don’t magically disappear. This is why experts suggest having 3-6 months of savings stashed away–just in case.
And why I recommend that you check your emergency fund at the end of the year to see if it needs a top-off.
Consider the following:
- How much is in your emergency savings account?
- What were your living expenses over the past three months?
- Do your savings exceed your living expenses?
- How much do you need to add monthly to hit your goal in 2024?
Make a note on a separate piece of paper to specify how much you need to save each month.
3. Update your retirement contributions
If you’re in your 30s and 40s, you’re likely starting to see a jump in your income, which means extra cash to put toward retirement.
And the more money you put into your retirement accounts, the more it will supercharge your future wealth potential and the faster you can hit your retirement goals.
Take a moment to review if you’re saving for the future effectively with the following questions:
- Are you maxing out your 401k? ($22,500 in 2023 and $23,000 in 2024)
- If not, can you max it out next year? Increase your contributions by 1%?
- Don’t have a 401k? Check out the limits on a wide array of other retirement accounts and ask the same questions.
Make a note under your monthly savings goal of how much more you will put towards retirement each month.
Note: Before establishing a more aggressive approach toward retirement, consider working with a financial advisor to be sure that you are (1) able to cover your living expenses without going into debt, (2) have a fully funded emergency account, and (3) have paid off high-interest debt.
4. Prepare for big purchases
Are you planning on making any big purchases this year?
A wedding, a big family vacation, or a medical procedure? Or do you anticipate a significant life change, such as a new baby, divorce, or starting your own business?
Whatever the case, you’ll want to get ahead of this now so you don’t run into trouble down the line.
Prepare for these purchases by asking:
- How much will this purchase cost?
- Do I have enough cash? Or do I need to save more, take out a loan, use a credit card, or refinance my car or home?
- Can I afford that debt if I need a loan or plan to use my credit card? Will the resulting monthly payments be too high?
- If I plan to pay in cash but don’t have enough savings, how much do I need to save each month, and where will I get the extra money?
Make a note under your retirement goal lying out the total cost of the purchase and your expected monthly debt payoff or savings contribution.
Note: If you’re planning on buying a house in the upcoming year, work with a financial advisor to determine how much house you can afford.
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5. Make a plan to tackle debt
If you have debt, especially high-interest debt like credit cards or a student loan, make a plan to pay those down so you’re not paying more than you need to in interest.
This frees up money for retirement, emergencies, and big purchases.
Audit your debt:
- Do I have any debt with an interest rate above 6%?
- If so, what strategy will I use to pay off that debt?
- Debt avalanche
- Allocate any extra money I get from things like a tax refund or an increase in salary and wages
- Consolidate loans or transfer my balance to another card
- Slash spending
- Increase my income with a side gig
Note how much you will put towards your debt each month.
6. Rebalance your investments
Just as your savings accounts may need to be adjusted to reflect inflation, your investments may need to be rebalanced to reflect changes in the market throughout the year.
For example, if your target portfolio balance is 80% stock and 20% bonds at the beginning of the year, by the end of the year, thanks to fluctuations in the market, it may be closer to 68% / 32%.
Work through the following to make sure your asset mix aligns with your goals:
- What was my target balance at the beginning of the year?
- Does this goal still align with my goals? Do I want to build wealth more aggressively or shift towards preserving wealth?
- What is the actual balance today?
Make a note of what adjustments you would like to make.
Note: This step may require selling investments, which could trigger a capital gains tax liability. Accordingly, speaking with a financial planning advisor before making any changes may be pertinent.
7. Get ready for tax day
The end of the year means the beginning of tax season.
No one likes it. But we all have to do it.
Make the process easier by getting a head start on centralizing your information or getting a tax prepared on board.
Prepare for filing your tax return:
- Gather all the information you’ll need (H&R block has a great guide)
- Know where you earned money, so you know what forms you’ll need to complete your tax return (i.e., W-2, 1099, 1099-G, 1098-E) and where the forms will come from
- Track down receipts if you plan on taking itemized deductions rather than the standard deduction
Note: If you plan on using a financial professional or an online platform to prepare your taxes, add the cost of that service to your notes.
8. Know your credit score
Your credit score is important because lenders will use it when deciding whether to give you a loan (such as a mortgage) or a line of credit (such as a credit card). Typically, the higher the credit rate, the lower the interest rate.
Additionally, your credit score is a simple indicator of your financial health. So it’s essential to take advantage of the free credit report you are entitled to annually.
Take a look at how you’re credit score is doing:
- Request your credit report from one of the following credit bureaus: Equifax, Experian, and Transunion
- Did your score go up since the prior year?
- If it went down, why?
- How can you increase your credit score in the coming year?
- Read your credit report closely–do you see any mistakes? Let the bureau know so that the mistakes don’t harm your score unnecessarily.
Write down three actions you can take today to improve your score.
9. Set your goals for 2024
Now for the fun part: looking forward to all the amazing things you will accomplish in 2024.
Take a moment to think about what you want your finances to look like by the end of the year. This should be a quick activity if you completed steps 1-8!
So physically write down your answers to the following.
- My goals for 2024 are
- Now add how you plan to get there
- Now add why.
Be specific with your answers.
For example, instead of writing down “pay off credit card debt,” say:
“In 2024, I want to pay off $5k of credit card debt, and I will do so by putting an extra $100 toward my bill. This will help me to improve my credit score and pay less interest overall.”
Tip: You are 42% more likely to accomplish your goals if you write them down. So give yourself a boost by physically writing out your list!
Check out this article for a “how to” on setting financial goals: Setting Monthly Goals For Your Money (+50 Achievable Ideas)
10. Update your budget
After completing the above steps, update your budget to reflect your notes.
- Has your income increased? If so, you’ll want to update your budget to account for every dollar of cash that comes into your accounts
- Did you decide to increase your savings? Or to more aggressively pay down debt? Save for retirement? Update your budget accordingly.
- Are you repeatedly spending less in one category and more in another? That’s an opportunity to reallocate, but before you do, reflect on whether you’re overspending because it’s a passion (like books, painting, travel) or because you’re numbing, eating out too much, etc.
Not sure how to get your food spending down? Here’s a nifty guide to do just that: Frugal Meal Planning: 11 Ways to Eat Smart for a Healthy Wallet
The power of completing a financial checklist
Look at how far you’ve come. Look at where you want to be.
How will you get there?
This is how you set yourself up for financial security and, ultimately, financial freedom.