Financial Planning Checklist: 8 Steps

Personal/family financial planning—is this a phrase that makes you wince? From complex Excel spreadsheets to the pros and cons of IRAs, personal finances and wealth management can quickly become whirlwind topics that have your head spinning.

The good news is that following a financial planning checklist is a fairly straightforward way to stay on top of your financial life. Plus, once you have your goals, budget, and plan set up, it’ll be easier to stay on top of your progress and ensure you’re on track to meet your family, professional, and personal financial goals. 

#1 Identify Your Goals

By visualizing the destination of your financial situation before you begin your journey, you can break down long-term goals into incremental steps—slowly walking your way to your dream financial state. Below are some common financial checklist goals to consider, but if yours is to buy up a deserted town and turn it into a Wild West theme park, then by all means add that. 

• Children – Little ones come with big bills. If you’re planning to have or grow a family, what financial needs can you predict? This may include childcare, funding a pricey sport or hobby, or setting up college savings plans. 

• Older family – Do you anticipate providing in-house care or financial assistance for parents or other relatives as they age? Consider the costs of homecare nursing, added utility bills, and more.

• Housing – Looking to buy a first home, move to a larger home, or fund a significant remodel? Will you need to replace aging appliances, create more space for additional children or family members, or hire labor for tasks that you need help with? Take these into account before you begin.

• Business and professional – Do you want to fund training for a new career direction, purchase a franchise business, or transition one partner to a stay-at-home parent? Classes range in price-point and overhead expenses to build a new business may require a loan. 

• Travel and leisure – What are your entertainment and hobby dreams? Consider a short tropical vacation, a round-the-world trip, buying a fishing boat, attending a week-long quilting retreat, or a new home theater set-up.

Once you have your financial plan laid out, add notes on timeline and priority. What is a next-three-month project versus a maybe-in-ten-years goal? Which do you consider critical, and which would be nice but not necessary? This process will help incorporate your short- and long-term financial decisions into a budget and savings plan.

#2 Evaluate Your Current Financial Status

Time to gather up your paper and electronic files. You’ll want to pull together: 

• Employment pay statements and any other documents relating to current-year income
• Employer (or independently procured) benefits statements
• Tax returns for the past three years
• Bank, brokerage firm, retirement account, and other investment statements 
• All insurance policies 
• Information on any trust funds you may be a beneficiary to 

Also gather current statements for debts, including: 

• Mortgages, liens, and equity-secured debt
• Credit cards including retail store cards carrying debt
• Car or other vehicle loans
• Student loans
• Business loans
• Any other personal loans

You’ll use these documents to populate your budget and evaluate your savings and insurance holdings. 

#3 Develop or Update Your Tracking Budget

A budget is a window into your spending and a tool to help you accomplish your financial goals. There are four main elements of a budget: 

• Income – The money you bring in each month (job, investments, monthly aid
• Expenses – The money you spend each month (rent, food, transportation)
• Assets – The things you own (house, car, investment holdings)
• Liabilities – Your debt (mortgage, student loans, credit cards)

When you keep a budget updated, you’ll be able to see how you’re allocating your money, debt, and savings over time. 

So how do you start a tracking budget? You can set up your own spreadsheet or download a premade budget template, or use a free or low-cost mobile budgeting app. Try a few out and see what’s most helpful for you. Remember, the best tool is one you’ll actually use, not one that’s tricked out with every bell and whistle but is too overwhelming to stay on top of.

#4 Create an Emergency Savings Fund

A savings plan is a strategy to help you identify what amount of savings you need, and then to actively save money for financial success. Top of the list for most financial advisors is your emergency savings. 

An emergency fund is intended to cover: 

• Car and home repairs
• Job loss
• Disability
• Medical or family emergencies

Because it needs to be available at short notice, an emergency fund should be liquid—cash you can get your hands on, versus money tied up in stocks, bonds, or long-term certificates of deposit. A high-yield savings account or money market account is ideal. 

So how much do you need? Ideally, an emergency fund should equal saving three to six months’ income, but if you’re just starting out, aim for a goal of $1,000. 

If you’re ready to throw in the towel, don’t panic—you’re not alone. A January 2022 survey showed that 56% of Americans wouldn’t be able to cover a $1,000 emergency expense with their savings.¹ Take a breath, and consider these tips: 

• Start with small steps; your fund will grow over time
• Automate savings if possible, such as moving a certain amount from checking monthly
• Never use emergency savings for anything but a true emergency

#5 Fund Your Retirement Savings

Just as with emergency funds, Americans tend to fall behind on retirement planning—only 36% are on track for retirement savings, and 25% have nothing saved, per a 2021 study by PwC.² The good news is that it’s never too late to start saving for your retirement plan. Some goals worth considering include: 

• Take advantage of company matching for 401k plans
• Use pretax dollars to fund an employer plan from your paycheck
• Automate monthly deposits to retirement income
• Set up a SEP IRA to invest tax-free if you’re self-employed or have a side business
• Set up a Roth IRA to protect you from taxes going up in retirement

How much will you need in retirement savings? There are many calculations out there, such as:

• Save 10–15% of your income starting in your 20s until retiring in your 60s
• Save 25 times your desired annual income before retiring in your 60s
• If you plan an early retirement, save 29 times your desired annual income 

To identify retirement income goals, consider: 

• Cost of living where you plan to retire
• Desired activities such as travel
• Whether you’ll downsize your home
• What you can eliminate from your budget, like work clothes and transportation

#6 Pay Off Debt

The first thing you need to figure out is whether your debt is from major purchases, such as a house or car, or from lifestyle spending. Secondly, are you staying on top of debt repayment on a monthly basis, or is it growing as you scramble to make minimum payments? 

If high-interest or rolling debt is a concern, consider speaking with a non-profit credit counseling organization. They can provide free information and guidance on managing debt, negotiating with creditors, and whether you may want to consider debt consolidation.³

#7 Look for Opportunities

Once you’ve summarized your financial picture, use details and documents to identify savings opportunities. Did you shop around once and then never revisit cost comparisons? Look into: 

• Utilities – Call and ask about savings, let them know you’re considering competitors
• Insurance – Shop around for auto and home insurance every one to three years
• Refinance – Keep an eye on interest rates and know when to refinance
• Energy savings – Look for ways to reduce your energy bills
• Restaurant use – Try to spend deliberately based on enjoyment vs. convenience
• Medical – Maximize your use of HSAs and flex savings, and choose the plan you need
• Grow your savings – Increase the percentage dedicated to retirement and other savings

#8 Rinse and Repeat with Monthly and Annual Updates

Your budget won’t help much if you only fill it in once. On a monthly basis: 

• Fill in your monthly income and spending details
• Keep an eye on spending habits and ensure income is greater than spending
• Identify unknown charges or expenses 

On an annual basis, review this checklist with the goal of ensuring: 

• Your assets are growing as planned
• Your debt is shrinking over time
• Your spending and savings is in line with your goals

Your financial plan isn’t a “set it and forget it” situation—it will change over time based on your shifting goals, needs, and resources. 

Considering a Property Sale but Reluctant to Move?

Converting your home equity to cash can fund trusts that will generate monthly income, provide the money needed for to pay off debt, build or buy a new home, secure your retirement, or help you fund your dream lifestyle.

If a house sale hasn’t been on your radar because you have no interest in moving, consider Truehold's sell and stay transaction, an alternative that allows you to unlock your equity without leaving your home. 

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Sources: 

1. CNBC. 56% of Americans can’t cover a $1,000 emergency expense with savings. https://www.cnbc.com/2022/01/19/56percent-of-americans-cant-cover-a-1000-emergency-expense-with-savings.html

2. PwC. Retirement in America. https://www.pwc.com/us/en/industries/financial-services/library/retirement-in-america.html

3. Money Crashers. 5 Different Types of Savings You Should Have Right Now. https://www.moneycrashers.com/types-savings-emergency-retirement-personal/

4. Consumer Financial Protection Bureau (CFPB). What is credit counseling? https://www.consumerfinance.gov/ask-cfpb/what-is-credit-counseling-en-1451/