Getting serious about setting and maintaining financial goals is crucial for securing long-term stability. While many readers have a good idea of what makes them financially successful and what needs to be done in an effort to improve success, others may be looking for help on these fronts.
Below we've put together a comprehensive checklist, along with examples, to help you set financial goals and assess your progress. For more help and professional guidance, please reach out to Benefit & Financial Strategies to speak with a financial advisor directly.
1. Have You Defined Your Financial Goals?
By defining financial goals, you provide a roadmap for managing your money. This helps you make better-informed decisions and move toward long-term financial stability.
1.1 Set clear short-, mid-, and long-term goals
- Short-term goal: Save $1,000 for an emergency fund
- Mid-term goal: Pay off $10,000 in credit card debt over the next two years
- Long-term goal: Save $500,000 for retirement before reaching 65
1.2 Set SMART goals
- Specific: Save up to put a down payment on a house
- Measurable: Put $500 per month into a savings account
- Achievable: Embrace budgeting to cut out unnecessary expenses
- Relevant: Buy a house to align with long-term financial stability goals
- Time-bound: Put $20,000 into a savings account within four years
1.3 Write down goals
- Pay off $5,000 in student loans
- Build a $10,000 emergency fund
- Increase retirement savings to 15 percent of income
1.4 Set target date for each goal
- Pay off $5,000 in student loans: Two years
- Build a $10,000 emergency fund: Three years
- Increase retirement savings to 15 percent of income: One year
1.5 Identify potential obstacles
- Pay off $5,000 in student loans: Unexpected expenses, loss of income, high interest rates
- Build a $10,000 emergency fund: Low disposable income, competing financial priorities, medical or car repairs
- Increase retirement savings to 15 percent of income: Rising cost of living, existing debt payments, lack of employer match
2. Have You Assessed Your Income & Expenses?
If you're having difficulties tracking expenses, you should consider using a budgeting app or other software to get a clearer picture of where your money is going.
2.1 List monthly income by source
- Full-time salary: $5,000 per month from primary job
- Freelance work: $500 per month from graphic design projects
- Rental income: $1,200 per month from a leased apartment unit
2.2 List monthly expenditures
- Rent/Mortgage: $1,500 per month
- Groceries: $400 per month
- Utilities (electricity, water, internet): $250 per month
- Car Payment: $350 per month
- Health Insurance Premium: $200 per month
- Phone Bill: $100 per month
- Transportation: $150 per month
- Entertainment & Dining Out: $200 per month
- Car Insurance: $120 per month
2.3 Assess living within means
- Income $5,000 per month, Expenses $4,200 per month: Living within means, saving $800 monthly
- Income $4,500 per month, Expenses $4,800 per month: Overspending by $300 monthly
- Income $6,000 per month, Expenses $6,000 per month: Breaking even, no savings
3. Have You Created an Emergency Fund?
You never know when an emergency will arise, so having an emergency fund is very important. Whether it's a medical emergency, loss of employment, or necessary automotive repair, you will thank yourself for having the foresight to set money aside for one of life's hardships.
3.1 Create an easily accessible emergency fund
- High-Yield Savings Account: Provides easy access while earning interest
- Money Market Account:Offers higher interest rates with check-writing privileges
- Separate Checking Account: Keeps emergency funds liquid and separate from daily spending
3.2 Make regular contributions
- Automatic Transfers: $50 per paycheck is automatically deposited into a high-yield savings account
- Bonus Allocation: 20 percent of the annual work bonus directed to the emergency fund
- Spare Change Rounding: Rounding up debit card purchases and saving the difference
3.2 Set up direct deposits
- Split paycheck deposits: 10 percent of each paycheck directly deposited into an emergency savings account
- Employer direct deposit option: Set up a portion of wages to go straight into an emergency fund
- Bank auto-transfer from direct deposit: Automatically move $50 from each paycheck into a high-yield savings account
4. Have You Managed Debt Effectively?
Effective debt management is key to paying down and paying off loans and credit cards. A few common methods are using debt consolidation, negotiating interest rates or repayment amounts, and working with a financial advisor to develop a strategy.
4.1 List all debts
- Credit Card Debt: $3,500 balance, 18 percent interest rate, $150 minimum payment due on the 15th
- Student Loan: $12,000 balance, 6.5 percent interest rate, $200 monthly payment due on the 1st
- Auto Loan: $8,500 balance, 4.2 percent interest rate, $275 monthly payment due on the 10th
- Personal Loan: $5,000 balance, 9.1 percent interest rate, $180 monthly payment due on the 20th
- Mortgage: $180,000 balance, 3.8 percent interest rate, $1,200 monthly payment due on the 1st
4.2 Create a repayment plan
- Debt Snowball Method: Pay an extra $200 per month toward a credit card with a $3,500 balance at 18 percent interest while making minimum payments on other debts
- Debt Avalanche Method: Focus on paying off a personal loan with a $5,000 balance at 22 percent interest first by allocating all extra funds while maintaining minimum payments on lower-interest debts
- Balance Transfer Strategy: Transfer a $4,000 credit card balance at 19 percent interest to a zero percent APR balance transfer card and pay it off within the promotional period to avoid interest
4.3 Assess credit score
- Excellent Credit: 790 credit score – Qualifies for the best loan terms and lowest interest rates
- Good Credit: 720 credit score – Eligible for most loans with competitive interest rates
- Fair Credit: 650 credit score – May face higher interest rates and stricter approval requirements
- Poor Credit: 580 credit score – Limited access to credit with high interest rates
- Bad Credit: 500 credit score – May require secured credit cards or loans with very high interest rates
5. Have You Contributed to Retirement Savings?
Saving for retirement is one of the most important investments you can make. You can start with a small contribution to your fund and gradually increase the amount as your income goes up.
5.1 Make regular contributions
- 401(k) Contribution: Contributing ten percent of each paycheck to an employer-sponsored 401(k) plan, with a five percent employer match
- Traditional IRA Contribution: Depositing two hundred dollars per month into a Traditional IRA to take advantage of tax-deferred growth
- Roth IRA Contribution: Setting up automatic transfers of one hundred fifty dollars per month into a Roth IRA to build tax-free retirement savings
5.2 Maximize employer match
- Dollar-for-Dollar Match: Employer matches one hundred percent of contributions up to five percent of salary
- Partial Match: Employer matches fifty percent of contributions up to six percent of salary
- Tiered Match: Employer matches one hundred percent of the first three percent and fifty percent of the next two percent
5.3 Review retirement goals
- Retirement Nest Egg: Save five hundred thousand dollars by age sixty-five through consistent contributions
- Annual Contribution Goal: Contribute fifteen percent of annual income to retirement accounts
- Maximize IRA Savings: Max out IRA contributions each year for tax-advantaged growth
6. Have You Protected Your Financial Future with Insurance?
Insurance is a safety net for so many of life's problems, and ensuring that you are properly protected can prevent any surprises down the road when you need the support the most.
6.1 Medical insurance coverage
- Employer-Sponsored Health Plan: Covers doctor visits, hospital stays, and prescription medications with a monthly premium and copays
- High-Deductible Health Plan (HDHP): Lower monthly premiums with a higher deductible, often paired with a Health Savings Account (HSA)
- Private Health Insurance: Purchased individually, offering customizable coverage options for medical expenses
6.2 Life insurance coverage
- Term Life Insurance: Provides coverage for a set period, such as twenty or thirty years, paying a death benefit if the policyholder passes away within the term
- Whole Life Insurance: Offers lifelong coverage with fixed premiums and a cash value component that grows over time
- Universal Life Insurance: Flexible coverage with adjustable premiums and a cash value that earns interest
6.3 Disability insurance coverage
- Short-Term Disability Insurance: Provides income replacement for a few months due to temporary injuries or illnesses
- Long-Term Disability Insurance: Covers a portion of income for extended periods if unable to work due to a serious medical condition
- Employer-Sponsored Disability Insurance: Offered as a workplace benefit, covering a percentage of salary during a disability period
6.4 Property insurance coverage
- Homeowners Insurance: Covers property damage, theft, and liability for accidents occurring on the property
- Renters Insurance: Protects personal belongings and provides liability coverage for renters in case of damage or theft
- Auto Insurance: Covers vehicle damage, liability for accidents, and medical expenses related to car accidents
7. Have You Optimized Tax Planning?
Tax planning has a number of benefits, but perhaps most importantly it can help you plan for tax liabilities to avoid paying more than you have to and any end-of-year surprises.
7.1 Assess tax withholding
- Single with Standard Deduction: Taxes withheld based on single filer status with no additional adjustments
- Married with Additional Withholding: Adjusted W-4 to withhold extra taxes to avoid owing at tax time
- Exempt from Withholding: No federal income tax withheld due to meeting exemption criteria
7.2 Maximize tax deductions
- Itemizing Deductions: Claiming mortgage interest, medical expenses, and charitable donations instead of taking the standard deduction
- Retirement Contributions: Contributing to a Traditional IRA or 401(k) to reduce taxable income
- Self-Employment Deductions: Writing off home office expenses, business supplies, and mileage for tax savings
7.3 Utilize tax-advantage accounts
- 401(k) Tax Advantages: Contributions are made pre-tax, reducing taxable income, and growth is tax-deferred until withdrawal in retirement
- HSA Tax Advantages: Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free
- FSA Tax Advantages: Contributions are made pre-tax, lowering taxable income, and funds can be used tax-free for eligible healthcare expenses
7.4 Keep track of deductible expenses
- Mortgage Interest: Deduct interest paid on a home loan for primary and secondary residences
- Student Loan Interest: Deduct up to a set limit of interest paid on qualified student loans
- Medical Expenses: Deduct unreimbursed medical costs exceeding a percentage of adjusted gross income
- Charitable Donations: Deduct cash or item donations made to qualified nonprofit organizations
- Self-Employment Expenses: Deduct business-related costs such as home office use, supplies, and travel expenses
8. Have You Invested for Growth & Wealth Building?
When you take growth and wealth building into consideration, you're taking the next step towards maximizing personal financial success.
8.1 Assess additional investment opportunities
- Brokerage Account: Investing in stocks, bonds, and ETFs for additional portfolio growth outside of retirement accounts
- Real Estate: Purchasing rental properties or REITs to generate passive income and long-term appreciation
- High-Yield Savings or CDs: Keeping funds in high-interest accounts or certificates of deposit for lower-risk growth and liquidity
8.2 Diversify your portfolio
- Stocks and Bonds Mix: Many investors use a mix of stocks for growth and bonds for stability to help balance equities and reduce overall risk
- Real Estate Investments: Rental properties or REITs are often used to add income streams and asset diversification
- International and domestic assets: Investing in both U.S. and global markets is another example of spreading risk across different economies
8.3 Educate yourself on investment opportunities
- Employer-Sponsored Financial Seminars: Hosting workshops on stocks, bonds, mutual funds, and retirement planning
- Online Investment Courses: Providing access to webinars or platforms that teach investment strategies and risk management
- One-on-One Financial Advising: Offering employees consultations with financial advisors to discuss personalized investment options
9. Have You Planned for Estate & Legacy Protection?
If you have generational wealth in the form of assets and liquidity, it's a good idea to plan for the transfer of your estate's wealth and legacy protection.
9.1 Create a will and estate plan
- Last Will and Testament: Specifies asset distribution, guardianship for minors, and executor responsibilities after death
- Living Trust: Allows assets to be transferred to beneficiaries while avoiding probate and maintaining privacy
- Power of Attorney: Grants a trusted individual authority to make financial or medical decisions if incapacitated
9.2 Appoint designated beneficiaries
- Spouse: Commonly named as the primary beneficiary for retirement accounts and life insurance policies
- Children: Often listed as contingent beneficiaries to receive assets if the primary beneficiary is deceased
- Charitable Organizations: Some individuals designate a nonprofit or foundation to receive a portion of their estate or life insurance payout
9.3 Power of attorney and medical directives
- Financial Power of Attorney: Grants a trusted person authority to manage financial affairs if incapacitated
- Medical Power of Attorney: Authorizes someone to make healthcare decisions on your behalf if you are unable to do so
Do You Need a Financial Plan of Action? Benefit & Financial Strategies Can Help
If you don't have a lot of bills or debt, you may not need professional help when it comes to managing your finances. However, for those who do require a robust financial plan, Benefit & Financial Strategies is here to help.
Our team is composed of financial advisors with experience in goal setting, retirement planning, and wealth transfer planning, to name a few. To speak with an advisor about your specific needs and goals, please reach out to our team today.