Financial Checklist: How to Prepare for the New Year

7 Steps That Can Improve Your Financial Health for the Future

One thing that your financial health has in common with your physical health is that it requires routine attention. If you leave it to chance, you may end up suffering the consequences. Conversely, if you’re intentional about your financial health, and utilize tools like the financial checklist I’m sharing today, you can stay on track toward your goals and make adjustments when needed.

The start of a new year is a good time to assess and evaluate where you are and to define realistic goals for the coming year and beyond. Use the financial checklist below as your guide as you close out one year and begin the next.

Step 1: Review Your Balance Sheet

Before moving forward, you must understand where you are. That’s why it’s important to do a New Year review of all your assets and liabilities. The easiest way to accomplish this is to gather recent statements from your bank, retirement, and investment accounts, then make a list of any valuable items you own, such as your home or vehicles. For liabilities, you’ll need statements from any credit cards with balances, student loans, or personal loans.

As you complete this assessment of what you have and what you owe, it’s also helpful to make a list of all your monthly expenses so you’ll have a clear picture of your financial responsibilities.

Step 2: Set Three Kinds of Goals

Once all your statements are collected and you’ve got a big-picture view, the next step on the financial checklist is to set three types of money goals: short-term, intermediate, and long-term. If you find it challenging to sort your goals into the proper categories, here are a few tips:

  • Short-term goals are usually ones you want to achieve within the next three years, such as paying off credit card debt, increasing your emergency fund, or purchasing life insurance.
  • Intermediate goals are those you’d like to accomplish in the next four to ten years, such as paying off student loans, saving for a down payment on a new home, or paying off a mortgage loan.
  • Long-term goals are those that are likely to take you longer than a decade, such as saving for a child’s college education or meeting a retirement savings goal.

Be thoughtful about what you’d like to accomplish, and don’t be afraid to dream big.

Step 3: Make Sure You’re Living on a Budget

If you want to make progress toward the goals you set in Step 2, the next essential step on your financial checklist is to make sure you’ve created a budget – and that you’re maintaining it. You can use all the information you collected in Step 1 regarding your monthly spending to establish an initial budget, then roll your goals into it also so that your budget funds your priorities.

If you’re a spreadsheet kind of person, it’s easy to create a budget that way. You can also use a paper planner or a budgeting app.

Step 4: Plan for Taxes

Since tax season doesn’t come far behind the New Year, this is a smart time to begin preparing the documents you’ll need to file your taxes, too. Whether you file on your own or work with a tax professional, taking your time to prepare – rather than rushing – is the best way to ensure you’re aware of any tax benefits you may be eligible for. It also gives you time to determine whether you need to pay any capital gains tax, so you won’t find yourself surprised by this potentially significant tax liability.

In this step on your financial checklist, you might also get to do some more enjoyable tax planning; that is, planning how you’ll use your tax refund if you’re expecting one. Can it help you accomplish one of your short-term goals more quickly? Can you use it to make progress on a long-term goal you’re excited about? Be thoughtful about how you’ll utilize it, and try not to have a “spend, spend, spend” mentality. Rather, think of your tax refund as a tool to improve your financial health.

Step 5: Consider Your Insurance Needs

Another important aspect of your financial health is your ability to handle unexpected or emergent scenarios. Failing to adequately plan for future contingencies could put you or your family members in financial turmoil, which is why it’s critical to evaluate your insurance needs as part of your financial checklist.

Life insurance and disability insurance are smart places to begin. Think, too, about whether you have adequate health insurance. Ask yourself whether you could save money on your existing homeowners and auto insurance by switching companies or bundling your policies. Any savings can be directed into a portion of your budget designed to meet your goals more quickly.

Step 6: Critically Review Your Retirement Accounts and Investment Portfolio

The statements you collected in Step 1 will show you what you have in each of these accounts, and this is the step in your financial checklist where you think about your strategy. What percentage of your income are you putting into these accounts? Are you maxing out your employer-sponsored 401(k) account? Is there another type of account that you should consider opening, such as a health savings account (HSA)?

If you work with a financial advisor to manage your investment portfolio, sit down together and make sure it’s balanced to best reflect your current risk tolerance and time horizons.

Step 7: Create or Review Your Estate Plan

Regardless of your age or relative health, it’s important for all adults to have an estate plan in place. If you don’t yet have a will or a trust, make this a short-term goal. If you have an existing estate plan, be sure to review it and make changes as needed. It’s also smart to review your beneficiaries on insurance policies and financial accounts during this step on your financial checklist.

Find a Trusted Partner to Help You Review Your Financial Checklist

The above steps can feel like a big undertaking if you’re carrying them out alone, but a professional financial advisor can help you work through your financial checklist. If you’d like to partner with an experienced advisor to strengthen your financial health in the new year and beyond, contact us today. At Paces Ferry, we combine experience and vision to help our clients reach their financial goals and gain peace of mind, too.

Paces Ferry Wealth Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”).  This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.


Zachary Morris

Zachary Morris, CFP®

Having traveled to over 35 countries, Zach is a believer in Ralph Waldo Emerson’s statement that Life is about the journey, not the destination. Being a CERTIFIED FINANCIAL PLANNER™ provides Zach the opportunity to help clients define and realize their journey, and co-founding Paces Ferry Wealth Advisors, an independent firm, allows the freedom to define the client experience along the way.