Written by Erich M. Imphong, CFP®
As financial planners, we are constantly helping others identify, save and invest towards their goals. And over time we have identified a checklist that is fitting for most people as they progress through their careers, grow families, and plow through the bumps and hurdles along life’s journey. Financial planning allows the complex to be simple and the abstract, tangible.
Below is a simple checklist every individual, couple, and family can follow.
Prepare a Simple Will
Whether you are married or not, a Simple Will should be in place. It can be prepared in several hours, and it helps ensure your assets go to the individual(s) whom they are intended. If you don’t have a will in place often families are placed with the burden of making arrangements for where your assets will be placed. For married couples with kids a Simple Will becomes very important as it determines who will be the custodian for the children while they are minors.
Purchase Life Insurance
The most cost effective insurance for most individuals is Term Insurance. For a relatively small premium paid, you can help ensure your family will be financially secure in your absence. In a tragic circumstance, these policies can be used to fund college, held in a trust to support your children, payoff a mortgage, and help augment income.
Identify Financial Goals
Some of us are saving for a house, paying off student loans, planning for retirement, or a mixture of all the aforesaid and more! Our goals help give us purpose and have balance. Regardless of what your goals are, identifying what you want will impact how you will achieve these goals.
Contribute to Your Workplace Retirement Plan
If you can participate in an employer sponsored retirement plan, you absolutely should. At the very minimum, you should contribute so as to maximize employer matching to the plan. Participating in a 401(k) plan is easy, automated and painless investing because it happens with every paycheck! If you are unsure how to invest these funds talk to a financial advisor.
Automate Your Investing
You should automatically fund your Roth or Traditional IRA and investment accounts. This can be achieved by linking your checking account to your investment accounts on a set day each month or quarter. A financial plan will help you determine what amounts to fund each account, and an advisor can plan the investments that make the most sense for your time horizon. It is also worth noting that an advisor may recommend debt be paid first before investing in this capacity. That said, typically if you don’t have high interest debt, you should first maximize your IRA as well as your spouses, and then fund additional investment and educational accounts (read more about Section 529) if applicable.
Quarterly Review of Your Bills
We’re in a time where everything is paid automatically from a checking account or a credit card. That said, it doesn’t hurt every quarter of the year to review the bills you’re paying as unnecessary costs do add up over an entire year. For example, review your cable bill and consider downgrading the plan if the current package doesn’t align with your use.
Feel Good About Your Finances
There is always a level of satisfaction when we make progress and check things off our list. Understanding your finances and feeling prepared absolutely makes the day to day more enjoyable. If there is a concern or issue, talk to your financial advisor.
The easiest way to get the ball rolling on your “to do” list is to seek guidance from a financial advisor who can include these items in a financial plan. Lastly, an advisor will help manage your investment accounts, coordinate items and encourage your progress!