Your personal finance checklist
Take a proactive approach
to your finances
Personal finances can seem overwhelming, especially as you amass more assets and have them spread across different types of spending, savings and investment vehicles. Layer in your credit accounts and your financial life starts to feel complex. The good news is, when you exercise a little organization, you can gain clarity on your situation and take important steps toward achieving your long-term goals.
Where should you start?
Right here with this personal finance checklist.
Budgeting and cash flow
This is the basic building block of financial wellness. Your budget is the blueprint for your day-to-day money management and the plan that will ensure you are heading in the right direction.
- Working from a list of your regular expenses, create a monthly budget. There are many tools out there to help formulate a budget based on your spending habits and best practices.
- Each month, compare your actual spending to your budget. This will help you understand where your money is going and identify changes that you need to make.
- Adjust your budget based on your comparison. Expenses can go up and down over time and new expenditures pop up. By tracking your budget, you’ll be able to adjust and be a better planner each month.
Debt management
No matter what stage of life you are in, debt is likely a part of your personal finances. It can be a powerful tool when used properly. From your mortgage to your rewards credit card, and everything in between, be sure to get a firm handle on your mix of debt and repayment strategies.
- Maintain a comprehensive list of all of your debts. This list should include any mortgage loans, lines of credit, credit cards, personal loans, second mortgages, student loans and auto loans.
- Keep track of the interest rates and payment terms for each of your debts. When it comes to repayment, not all loans are the same. Some have fixed rates and defined time horizons, while others have variable rates and are open-ended.
- Consider debt consolidation. It may make sense to simplify your debt management by consolidating multiple loans and credit cards into one single loan like a home equity line of credit. This gives you one convenient payment, often at an overall lower rate, enabling you to accelerate your pay-off.
Shore up your savings
A balanced savings plan is key to building wealth and diversifying your portfolio. When done right, you have a mix of accounts that allow you to balance liquidity and earnings.
- Establish an appropriate emergency fund. This should be enough to cover three to six months of expenses and be easily accessible.
- Bolster your savings mix with higher yield accounts. Money market accounts and certificates of deposit offer higher interest rates. Structuring your accounts based on the terms can help you maintain your cash flow and position yourself to take advantage of good offers. This could look like a primary money market account and a series of CDs of different lengths.
- Automate monthly transfers into your savings accounts. Make saving easier with automatic transfers using tools like online banking. Then you know you are regularly building up your savings accounts.
Estate and legal planning
Never forget about long-term financial planning. Taking the right steps now will make your retirement and the eventual transition of your wealth smoother. Most importantly, you will have peace of mind knowing that your affairs are in good order.
- Get a will. Work with an estate attorney to draft up a will detailing your wishes. Make sure it is valid and regularly revisit it to make sure it still reflects your intentions.
- Consider forming a trust. In addition to establishing your desired asset distributions, trusts can also protect your assets from creditors, help avoid probate and minimize tax burdens.
- Maintain your beneficiary designations. Ensure that your accounts have assigned beneficiaries to ensure a smooth transition of funds. Periodically review your beneficiaries and make changes as needed.
- Store your estate documents securely. Make sure all relevant parties know how to access your will and trust documents. Keep them in a safe place, protected from fire or water damage.
Tackling taxes
As your finances become more complex, so too can your taxes. It is important to be prepared for tax season so that you can ensure that your returns are filed properly and you maximize the use of any deductions and credits.
- Work with a good Certified Public Accountant. Ideally, you want to work with a local CPA for ease of communication and collaboration.
- Organize your tax documents throughout the year. Keep a running file of all tax-related documents so everything is in one place. That will make year-end organizing easier.
- Take advantage of all available deductions and credits. A good CPA will ensure that you minimize your tax burden with applicable deductions and tax credits.
- Meet with your CPA regularly. At a minimum, you should have an annual face-to-face meeting with your CPA to review your finances and tax situation. If you experience any life events that alter your financial position, you may want to meet more frequently.
Compile your personal financial team
You don’t have to manage your personal finances alone. Assemble a team of trusted specialists who can work together for your benefit.
- Work with a financial advisor or wealth manager you trust. Going local is always helpful to ensure good communication and collaboration.
- Choose a private banker. They are well-versed in the needs of high-net-worth individuals and are often the connecting point for your team.
- Remember the CPA. Looping our CPA into the team and opening up lines of communication will pay dividends.
- Select a knowledgeable insurance agent. They will work with you to ensure that your assets are protected.
Need help checking the boxes?
Our private banking team works with customers every day to ensure these different areas of their personal finances are covered. If you need help with one or more of these areas, connect with us. We’ll help you put together a plan and connect you to the right resources for your situation.
