It can be difficult to get your finances in order, especially when you’re starting out, so I wanted to make a personal finance checklist to help everyone get the fundamentals down. However, this checklist isn’t just for beginners. If you’re currently having a hard time with your finances, try to go through this list and look for problem areas you can fix or improve. If you’re not struggling with finances, still give it a peek – there are almost always ways we can keep improving!
Simplify Your Current Financial Landscape
I hope this goes without saying, but the simpler you make it to manage your finances, the easier it will be to stay on top of everything. Besides, if it’s easy to keep track of it all you’re far more likely to actually stay consistent along the road to achieving your financial goals. I personally recommend minimizing the number of banks you have.
For example, Axos has great checking and savings account options that make it a great all-in-one solution for many. Unfortunately, it is online – which may be an issue for some. If that is an issue for you, I’d recommend using Axos to manage your finances in general, and use a nearby brick-and-mortar bank to meet your other needs.
Outside of banks, a tool that makes managing your finances really easy is Personal Capital. You can read my review of it here if you’re interested. The short story is this, it has some nice features that do cost money, but it also provides a plethora of financial tools for free. So, you can create an account and link your banks and investment accounts to manage it all out of this one platform (yes, for free).
Identify Your Long-Term And Short-Term Financial Goals
It’s hard to give advice on financial goals, as those are incredibly personal matters by nature. If you’re struggling to set some basic financial goals, try asking yourself the following questions:
- Where do I want to be in 5 years and what do I want to be doing? 10 years?
- Overall, what kind of lifestyle do I want to live (frugal vs luxurious and expensive)?
- When it comes to personal finance, what are my biggest weaknesses? Strengths?
- If money weren’t an issue, what would I want to do every day?
- How important are things like home ownership to me?
- If I had $1000, what would be the best use for it – to get me closer to where I want to be?
Review Your Expenses And Start Budgeting
Budgets are the backbone of a healthy financial situation. Not everyone uses them, because they find them to be too tedious, but you can use whatever budgeting technique works for you. If you need help and want a basic overview of how to start a budget, check out my guide . If you actually do want a very detailed (and arguably tedious) budget, to maximize your savings, check out my article on zero-based budgeting.
At the end of the day, personal finance is exactly that – personal. It’s important to keep your spending in check and monitor it to some extent. The precise methods are entirely up to you and whatever makes your life easier.
Check Your Credit Score
If you have no idea what a credit score is, or just need more details on how it is calculated, check out my breakdown of the topic here. If you don’t have a way to check your credit score, try using myFICO. To put it simply, your credit score is basically a snapshot of your finances from the perspective of lenders. The better your credit score, the easier your life can be. A low credit score can help you get great deals and interest rates. So, it’s important to have a general idea of what your current credit score is – and if you need to take any steps to start improving it.
Eliminate Your Debt
Now, not all debt needs to be eliminated as soon as possible. For example, debt from a mortgage may not have high interest rates, so it shouldn’t be a high priority. However, any debt you have with high interest rates needs to go. This can range from credit cards to student loans. For me, if an interest rate is over 5%, it’s a top priority for me to get rid of that debt. If you need help, I have a lot of information on two of the best methods for getting out of debt – the debt snowball and the debt avalanche. Like everything with personal finance, use what works the best for you and your situation.
Build An Emergency Fund
Emergency funds are an absolute must. I went over why in another article, which you can read here. For most people, about 6 months worth of expenses in a high interest savings account should do the trick. If you have inconsistent income, work in a highly volatile field, or are retired, you may want to save 12-18 months worth of expenses. I’m not trying to beat a dead horse, but stick to what works for you and your personal situation. Of course, remember that money you have in savings, even at the higher interest rates, will be losing its value to inflation. So have a healthy emergency fund, but try not to keep to much in it either.
Get And Maintain Proper Insurance Coverage
There are tons of different types of insurance you may need or want. Whether you need dental, vision, auto, medical, homeowners, life, or something else entirely, you need to stay on top of it. Figure out what you need and set up the appropriate accounts for you and your family. If you have more questions about tricks on getting the best deals for different types of insurance policies, check out my definitive guide on insurance.
Start Planning For Retirement
I wrote a complete guide on planning for retirement that everyone should check out if they’re getting serious about their retirement investments. The earlier you start investing for retirement, the sooner you don’t have to worry about it anymore. Find a retirement strategy and stick to it. If you’re just getting started, hit your employer’s 401k match and do your best to max out a Roth IRA.
If you want to retire early, try to also invest outside of retirement accounts. Retirement accounts can be limited, to a certain extent, because you have to pay penalties if you withdrawal early. So, start investing in a standard account with the brokerage of your choosing to give you a little more flexibility in the future. If you’re looking for a brokerage, I highly recommend M1 Finance for its selection of index funds and ETFs as well as its ease of use. Another good pick is Vanguard.
See A Consultant
I get it, finances can get complicated. If you have a hard time handling it on your own, try to consult a professional. Even if you know what you’re doing, sometimes another opinion can be good to help you sort everything out. Either way, consulting a professional is a great time to ask questions and get the clarity you need. On top of that, if you find an accountability partner (like a spouse or close friend) who can keep you consistent as you work towards your financial goals – that can be invaluable.
Conclusion
I hope this checklist helped you out! Every year or two, be sure you go back over it and reevaluate your current financial situation. Of course, if you have any additional tips, be sure to leave them in the comments! For more content like this, and a free budgeting template and financial goals worksheet, be sure to sign up for the Bitter to Richer newsletter.
