Mon. Sep 25th, 2023

Your Annual Financial Planning Checklist

If you’ve taken on the task of mapping out your annual financial plan, you deserve a pat on the back. Making sure you’ve covered all the bases is important to both your short-term and long-term financial health. Keeping track of your progress with an annual financial planning checklist makes it easier to see which tasks have been completed and which you still need to tackle.


  • An annual financial plan allows you to determine your financial situation at the given moment.
  • It should include looking at all your assets and liabilities, deciding what your goals are, and selecting the methods you intend to employ to achieve them.
  • Make sure you check off every strategy you’ve considered, even if you decided not to pursue it.

What Is an Annual Financial Plan?

An annual financial plan is a way to determine where you are financially at this particular moment. This means taking into consideration all your assets—how much you get paid, what’s in your savings and checking accounts, how much is in your retirement fund—as well as your liabilities, including loans, credit cards, and other personal debts. Don’t forget to include things such as your mortgage or rent, plus utility bills and other monthly expenses.

This snapshot should also factor in what your goals are and what you’ll need to accomplish in order to get there. This can include things such as retirement planning, tax planning, and investment strategies.

Annual Financial Plan Check-Up

Now that you know what an annual financial plan is and how to make one, let’s list the most important steps in the process. Check off each step that you’ve considered, even if your response was, “No, I don’t want to refinance my mortgage,” or “My credit cards are already paid off.” The idea is to make sure you’ve looked at the issue. It’s vital for you to cover every item so that you have a full financial inventory.

Create Your Personal Financial Inventory

Your personal financial inventory is important because it gives you a snapshot of the health of your bottom line. This annual self-check should include:

  • A list of assets, including items such as your emergency fund, retirement accounts, other investment and savings accounts, real estate equity, education savings, etc. (any valuable jewelry, such as an engagement ring, belongs here too)
  • A list of debts, including your mortgage, student loans, car loans, credit cards, and other loans
  • A calculation of your credit utilization ratio, which is the amount of debt you have versus your total credit limit
  • Your credit report and credit score
  • A review of the fees you’re paying to a financial advisor, if any, and the services they provide

Set Financial Goals

Once you have a personal financial inventory completed, you can move on to setting goals for the remainder of the year and for the next 12 months. Your goals should be divided into short-term, mid-term, and long-term ones.

Among your short-term goals might be to:

Your mid-term goals might include:

  • Getting life insurance and disability income (DI) insurance
  • Thinking about your dreams, such as buying a first home or vacation home, renovating, moving, or simply saving money in order to fund starting a family or sending children or grandchildren to college

Your long-term goals could encompass:

  • Determining how much of a nest egg you’ll need to save for a comfortable retirement
  • Figuring out how to increase your retirement savings

Focus On Family

If you’re married, there are certain things that you and your spouse should be thinking about on the financial front. These are some of the items that may be on your punch list:

Review Your Retirement Savings Plans

Saving for retirement in an individual retirement account (IRA) or a 401(k) plan is a smart way to enjoy some tax advantages. As you put together your annual financial plan, you should consider whether you need to:

  • Decide whether a Roth or traditional IRA is best for you now
  • Consider switching an existing IRA to a different brokerage
  • Convert a traditional IRA to a Roth IRA (times when either your income or the value of your account is lower are especially good for making this change at the lowest possible cost)
  • Do the same for your 401(k), which can also be Roth or regular
  • Roll over any old 401(k) accounts from a previous employer
  • Get an update if you’re self-employed on the limits for SEP IRA or other self-employment retirement accounts and maximize your contribution amounts
  • Increase or decrease your annual contribution amounts to retirement accounts

It’s vital to review where your investments are, especially during a market shift, such as when the market cratered early in the coronavirus pandemic.

Review Your Investments

It’s important for investors to take stock of where their investments are during the annual financial planning process. This is especially true when the economy undergoes a shift.

  • Check your asset allocation. If stocks are taking a dive, for example, you may consider adding real estate investments into your portfolio mix to offset some of the volatility.
  • Figure out which investments will do the best job of meeting your asset allocation goals—and whether your current investments still fit that profile.

Rebalance Your Portfolio

Periodically rebalancing your portfolio ensures that you’re not carrying too much risk or wasting your investment dollars on securities that aren’t generating a decent rate of return. It also makes sure that your current portfolio reflects your investment strategy, as changes in the market often cause a shift that needs to be corrected to maintain the diversification you originally planned.

  • Look at which asset classes you have in your portfolio and where the gaps are. If necessary, refocus your investments to even out things.
  • Consider the costs of managing your portfolio and decide whether it’s time to try a robo-advisor or another strategy to reduce them.

When making your plan, don’t forget to consider the tax implications of any financial changes you may be making.

Plan On Addressing Tax Planning for Investments

While you’re looking over your portfolio and rebalancing, don’t forget to factor in how selling off assets may affect your tax liability. If you’re selling investments at a profit, you’ll be responsible for paying short- or long-term capital gains tax, depending on how long you held the assets. This step can wait until the end of the year. When you get to that point in time, you’ll want to consider these strategies:1

  • Harvesting tax losses by replacing losing investments with different ones to offset a potentially higher tax bill
  • Looking into whether you should offset capital gains and losses
  • Investigating whether it makes sense to use appreciated securities to make charitable donations or support lower-income family members

Update Your Financial Emergency Plan

As the nation—and the world—has certainly learned due to the COVID-19 pandemic, a sizable emergency fund is helpful when financial troubles descend, so be sure you have socked away adequate resources. While you’re at it, look at your broader emergency plan as a whole.

  • If you don’t have three to six months’ worth of expenses tucked away, building your emergency savings should be a top priority. 
  • Invest in insurance: Are you covered for a temporary disability, for example?
  • Make sure you have both financial and medical powers of attorney in place.

Look Ahead to Future Savings

As you move through the year, think about where else you could be saving money to fully fund your emergency savings and put aside more for the future. Consider whether you should:

  • Refinance your mortgage
  • Rethink your car insurance
  • Lower your food bill
  • Utilize flexible spending or health savings accounts
  • Cut the cable TV cord
  • Curb your energy bill
  • Divert your paycheck to savings by contributing more to retirement accounts or funneling money directly from your paycheck to an emergency savings account

Work On Building Alternative Income Streams

A 401(k), pension plan, or Social Security benefits may all be potential sources of income in retirement, but they’re not your only options. Figure out what else you could build in.

  • Investing in a rental property and becoming a landlord can provide regular income.
  • Real estate crowdfunding offers some interesting possibilities for investors who don’t want to own a property outright.
  • A part-time job may be the right solution for adding to your income. With the increasing amount of work-from-home gigs, you have an abundance of flexible hour jobs that you can add to your core job. The biggest constraint is time management, so reconcile your time and the jobs you can do.
  • If funds are tight, you are old enough, and you own your home, investigate whether a reverse mortgage is a good solution for you
  • Think about purchasing dividend stocks, starting a side hustle, creating a website that you can monetize, or making investments in peer-to-peer lending. These options require varying degrees of time and money to get started, but they all provide avenues for boosting income in retirement.

Start Using or Update Your Financial Planning Apps

Using financial planning apps to track your expenses and income can simplify your financial life, but not all programs are created equal. As you wrap up your annual financial plan, review the financial planning apps and software you’re using to see if they still fit your needs. If you’re not putting any apps to work yet, take the time to review the options and how they can help you manage your money.

What Is a Financial Plan?

A financial plan takes a snapshot look at the state of your personal finances. It balances your assets against your liabilities and considers your financial goals and what you may need to do to realize them. It’s a good idea to look at your financial plan annually, as well as after any major life event, such as marriage, divorce, birth, or death, that can substantially affect your finances.

Why Do I Need a Financial Plan Checklist?

You need a written checklist so that you don’t forget something important that you should be monitoring. It is vital to check off every item on the list, even if you don’t intend to implement some of them, as in, for example, refinancing a mortgage. You need to know that you have looked at everything.

Do I Need Professional Help to Do My Checklist?

If your finances are relatively simple, you should be all right creating and checking your own list. However, the more complicated they become, the more you should consider hiring a tax or financial advisor, and perhaps an estate-planning lawyer, to help you see the fullest picture possible.

The Bottom Line

An annual financial plan is an exceptionally valuable tool for maintaining peace of mind about your finances today and in the future. Best-case scenario: You’ve checked off all the items on this punch list by now. If not, don’t hesitate to put time on your calendar to do so.


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