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financial planning checklist

The key to gaining financial security is to set financial goals and keep re-evaluating your progress. Without working toward anything specific, you’re likely to spend more than you should without realizing, leaving you vulnerable to life’s unexpected moments.

Financial planning doesn’t have to be difficult. You can speak with a financial advisor, who is best equipped to help you on your way to financial success, or you can educate yourself, sit down and write up a list. Follow this financial planning checklist and keep track of your financial planning goals for a firmer financial future.

Annual Planning Checklist

An annual financial plan is a way to re-evaluate your financial goals. While you may have already made a complete financial plan in the past, financial experts recommend annual check-ins to evaluate how your situation has changed over the preceding year. You’ll take your long-term financial goals into consideration and check off your progress.

1. Take a Personal Inventory of Your Finances

An annual personal inventory gives you a snapshot of your financial status, which makes it easy for you to compare your progress from any given year. If you have an inventory from last year–great news! Update it for 2022, and you can easily compare across categories. If it’s your first time, this is how you make one:

  1. Write a list of your assets and the amounts. That includes how much you get paid, savings, your retirement account values, any real estate equity, etc.
  2. List your debts. This is where you add up your mortgage, your car loan, your student loans and credit card balances.
  3. List your credit utilization ratio. This is the amount of debt you carry versus your total credit limit, and it lets you know exactly how much you rely on credit to get by.
  4. Take a look at your credit report and credit score.

Evaluate the shape of your finances by comparing your financial snapshot with your financial plan. If your goal is to pay off your debt, have you made any progress? If you wanted to save more for retirement, did you add to your assets column?

2. Evaluate Major Life Changes

As part of your annual financial checkup, you’ll need to consider how your life has changed over the past year and how you think it may in the next. Do you anticipate any big changes? Are you considering changing jobs? Will you be getting married? Moving?

If you have a family, have you already started thinking about saving for their college education? If you have elderly parents, have you considered long-term care insurance in case one or both become incapacitated and need assistance?

Evaluating these life changes may result in a shifting of your financial goals.

3. Adjust Your Savings Plan for Retirement

financial planning checklist

Saving for retirement requires its own section, since it’s both a larger and longer-term goal than others. Whether or not you’ve already begun saving for retirement, you should evaluate what tax treatment is best for you as time passes.

  • Depending on your marginal tax rate, is a traditional or Roth retirement account appropriate for you?
  • Is now a good time to convert your traditional IRA to a Roth IRA?
  • If you have leftover 401(k) funds from a past employer, now is a good time to roll over those funds into your current 401(k) or a corresponding IRA.
  • Evaluate if you’ve maximized your contributions for the year and adjust your contributions accordingly.

4. Evaluate Your Investment Portfolio

In addition to checking your retirement accounts, you’ll also need to conduct your annual investment portfolio check. Financial experts recommend reviewing your portfolio asset allocation at least once a year, buying and selling assets to realign your portfolio with your desired allocation profile. If your financial situation and goals have changed, now is also the time to rebalance your portfolio and make sure your investments follow your desired diversification strategy.

One point to take into consideration is how your reallocation or rebalancing will affect your taxes. When you buy and sell assets, consider how employing tax strategies like tax-loss harvesting may help you reduce your tax burden and save more over the long term.

5. Review Your Insurance Coverages

Since you’re checking your finances, don’t forget to review your insurance coverages. Homeowner’s or renter’s insurance should be reevaluated yearly to make sure that the coverages will be enough to pay for any insured damage in the event you need it.

Make sure that you’re covered in case of an accident or disability, as these types of major changes can also heavily affect your future financial picture.

Consider changing your health insurance or contributing to a health savings account so that you can rest assured that you’ll be able to cover medical costs if necessary.

6. Update Your Estate Plan and Associated Documents

Lastly, you’ll need to evaluate if you’ve prepared an estate plan in case of your passing. If you have, make sure it’s updated to reflect your intentions and consider signing a durable power of attorney as part of your estate plans. If you haven’t, consider speaking with an expert to plan how to transition your estate. It may be beneficial to transfer some to your heirs ahead of time, both to ensure your intentions are properly realized and to benefit from certain tax strategies.

The Bottom Line

financial planning checklist

Reviewing your financial plan annually is a valuable tool for ensuring that you meet your goals. You’ll be able to measure yourself how much progress you’re making, which can help keep you moving forward. A financial plan can give you peace of mind about your finances in the future, so don’t wait–go through your financial planning checklist today.

Tips for Building Wealth

  • Not sure what investments and strategies will help you meet your long-term goals? For a solid financial plan, consider speaking with a qualified financial advisor. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Use SmartAsset’s free investment calculator to get a good estimate of how to grow your money over time.

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Photo credit: ©iStock.com/marchmeena29, ©iStock.com/marekuliasz, ©iStock.com/Eva-Katalin

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