Taking charge of your finances requires diligence and organization. If you’ve embarked on the journey of crafting your annual financial plan, you’re already on the right track. Ensuring you cover all bases is crucial for both short-term stability and long-term prosperity. A comprehensive annual financial planning checklist serves as your roadmap, enabling you to track completed tasks and identify areas needing attention.

What is an Annual Financial Plan?

An annual financial plan serves as a snapshot of your current financial standing. It entails assessing all assets—such as income, savings, retirement funds—and liabilities, including loans and debts. Don’t overlook recurring expenses like mortgage payments, utility bills, and monthly outlays.

Moreover, your plan should outline your financial goals and the strategies necessary to achieve them. Whether it’s retirement planning, tax management, or investment strategies, your plan should encompass all facets of your financial journey.

The following checklist outlines essential steps in evaluating your annual financial plan. Even if certain tasks, like mortgage refinancing or credit card debt repayment, aren’t applicable to your situation, ticking off each item ensures a comprehensive overview of your financial landscape.

  1. Create a Personal Financial Inventory

Your personal financial inventory is the cornerstone of financial planning. It provides a snapshot of your financial health, encompassing:

  • Assets: Compile a list including emergency funds, retirement accounts, investments, real estate equity, and education savings. Valuable possessions like jewelry should also be included.
  • Debts: Enumerate mortgage, student loans, car loans, credit card balances, and other outstanding debts.
  • Credit Utilization Ratio: Calculate the percentage of available credit currently utilized.
  • Credit Report and Score: Obtain and review your credit report and credit score annually.
  • Financial Advisor Fees: Assess fees paid to financial advisors, if applicable, and evaluate the services they offer.

By meticulously documenting these aspects, you gain clarity on your financial standing and can devise strategies to optimize your resources effectively.

2. Establishing Financial Goals

After completing your personal financial inventory, the next step is setting achievable goals for the upcoming year, categorized into short-term, mid-term, and long-term objectives.

Short-term Goals:

  1. Establish a budget using user-friendly budgeting apps to effectively manage finances.
  2. Build or bolster an emergency fund to ensure financial stability in unforeseen circumstances.
  3. Pay off outstanding credit card balances to alleviate debt burdens.

Mid-term Goals:

  1. Secure life and disability income insurance to safeguard against unforeseen events.
  2. Contemplate aspirations such as home ownership, home renovations, family planning, or funding education expenses.

Long-term Goals:

  1. Determine the required nest egg for a comfortable retirement and strategize on how to achieve it.
  2. Explore avenues to bolster retirement savings for a secure future.

3. Create a Family Plan

When considering family planning or care giving responsibilities, address the following financial considerations:

  1. Calculate future college expenses for children and select appropriate college savings accounts.
  2. Assess options like long-term care insurance or life insurance for elderly parents’ care.
  3. Evaluate the necessity of long-term care or life insurance for yourself and your spouse.
  4. Devise a retirement timing strategy, including Social Security claiming plans.

4. Review Retirement Savings Plans

Optimizing retirement savings is crucial for long-term financial security. During your annual financial review, prioritize the following actions:

  1. Choose between Roth or traditional IRAs based on your financial situation.
  2. Assess the suitability of your current IRA brokerage and consider switching if necessary.
  3. Evaluate the opportune time to convert a traditional IRA to a Roth IRA.
  4. Review and adjust contributions to your 401(k) plan, considering Roth and traditional options.
  5. Consolidate old 401(k) accounts from previous employers.
  6. For self-employed individuals, maximize contributions to SEP-IRA or other retirement accounts based on updated limits.

By meticulously planning and executing these steps, you pave the way for financial stability and long-term prosperity.

Get in touch to discuss your current and future financial aspirations. A quick, no obligation conversation could change your life for ever!

Call Allied Financial at 096 60044