Your Yearly Financial Checklist

A full trip around the sun is always reason to pause and celebrate. It’s also a good time to reflect, to think about where you are, and where you want to be.  

And since getting where you want to be requires money, here’s how to start funding your goals so that the next time you’re blowing out candles you’re not just thinking about what you want to do, but also the amazing things you’ve done. 

This simple yearly financial checklist can help get you into better financial shape. 

CHECK IN ON YOUR SPENDING 

Whether you have a hard-and-fast budget, or you generally know how much you can spend every month, it can be easy to let spending get a little out of hand. Do a quick review of your spending to see if you should make any tweaks. The goal here is to find things that don’t really matter to you. Sometimes small changes can add up over time. 

UP YOUR SAVINGS BY A SMALL AMOUNT 

Speaking of small changes adding up over time, upping your automatic monthly savings by small amounts can help you save more while barely noticing the money is gone. That can make a big difference for long-term goals like saving for a home, a wedding or retirement. 

START FUNDING A NEW GOAL 

Financial planning rarely happens all at once. Sometimes you fund the most critical goals first like emergency savings, insurance and retirement. While saving for your child’s wedding may have initially taken a back seat, maybe this is the year to get started. Review your goals and consider beginning to fund a new one. 

REVIEW YOUR ESTATE PLAN / BENEFICIARIES 

Did anything happen over the past year that would require you to update your estate plan or beneficiaries? These updates are frequently overlooked — and they’re a big deal. Did you get married? Divorced? Have children? These are all times when you may want to change who gets what and who would make decisions if you can’t. And it’s important to update both your estate planning documents and your beneficiary designations on actual accounts and insurance; the beneficiary designations will trump what’s in your will. 

UPDATE YOUR INSURANCE 

Did you make any major purchases over the past year? Perhaps you bought an expensive piece of jewelry or finished your basement. Re-evaluate your insurance on a yearly basis to make sure it covers the important things you own. You may want to consider extra coverage for your jewelry or a home addition. In addition, did you get married or have children, if that’s the case you may want to consider additional life insurance. 

CONSIDER CONVERTING TERM INSURANCE TO PERMANENT 

Hopefully you have a mix of term and permanent insurance. With term you get the most death benefit at the lowest cost. But permanent insurance won’t expire and offers additional benefits that you can use to reach multiple financial goals during your life. As you get older, and have more money to contribute to your financial goals, it may be a good idea to convert some of your term insurance to a permanent policy to take advantage of the additional benefits it can add to your financial plan. And, you’ll likely be able to do so without taking another health exam. 

CHECK IN ON YOUR INVESTMENTS 

There are a couple key questions with your investments that you should ask on a yearly basis. First, do you need to rebalance? If stocks do better than bonds, your asset allocation can get out of whack. Perhaps your target 70/30 stock and bond split is now 80/20. That’s a good time to sell some of your winning stocks and buy more bonds to get back to a 70/30 split. And speaking of that allocation, do you still have the right one based on your risk tolerance? As you get closer to needing money for a larger financial goal, it’s generally smart to get a little more conservative and tilt your allocation away from stocks into less risky assets. 

CHECK YOUR CREDIT SCORE AND REPORT 

Good credit is critical to reaching your financial goals. And it’s important to check in on it regularly. According to Experian, a score about 700 is generally considered good. Above 800 is considered excellent. Make sure your score is at least good and consider working to get an excellent score. You should also check your credit report annually to make sure there’s nothing suspicious on it.  

CHECK IN WITH YOUR FINANCIAL ADVISOR 

Meet with your financial advisor on a yearly basis. Worried you’ll forget? Schedule it on your birthday! Here’s why that regular communication is key: He or she will likely cover many of the topics above and make tweaks to your plan based on your answers.