As we enter the second half of 2023, now is the perfect time to start thinking about your financial goals for the remainder of the year, and beyond. Whether you’re a seasoned pro or just starting, having a strong financial plan to reach your short- and long-term goals is always a good idea.
Our comprehensive financial planning checklist will guide you through the steps needed to get your finances in order for 2023. By taking the time now to plan, you’ll be in a better position to achieve your financial goals in the coming years.
Step 1: Establish Your Financial Goals
The first step in any financial planning process is establishing your goals, which will guide your financial decisions and investments throughout the year. Here are some questions to ask yourself when setting your financial goals:
- What do I want to achieve financially in the next 6 months? 1 year? 3 years?
- Do I want to save for a big purchase, such as a down payment on a house?
- Do I want to pay off debt?
- Do I want to start investing?
- Do I want to ramp up my retirement savings?
Step 2: Create a Budget
Creating a budget is a critical step in financial planning – it should be realistic and consider all your expenses, including bills, groceries, and entertainment. Use a budgeting app or a spreadsheet to track your expenses and identify areas where you can cut back. Here are some tips for creating a budget:
- Track your expenses for at least one month to get a good idea of where your money is going.
- Use a budgeting app or spreadsheet to keep track of your costs.
- Set realistic limits for each category in your budget.
Step 3: Review Your Retirement Accounts
It’s never too early to start planning for retirement. If you have a retirement account, such as a 401(k) or IRA, it’s essential to review it regularly to ensure it’s on track to meet your retirement goals. Here are some questions to ask yourself when checking your retirement accounts:
- Am I contributing enough to my retirement account?
- Is my asset allocation appropriate for my age and risk tolerance?
- Am I taking advantage of any employer-matching contributions?
Review your retirement plan to ensure you’re contributing enough to reach your long-term financial and lifestyle goals. If you’re not contributing enough, consider increasing your contributions or changing your investment strategy.
Step 4: Increase Savings
Increasing your savings is essential to achieve your financial goals. Whether saving for an emergency fund, a down payment on a house, or retirement, having a savings plan in place is crucial.
Consider setting up automatic savings to make it easier to save money consistently. You can set up automatic transfers from your checking account to your savings account or use a savings app to round up your purchases and save the difference.
We also recommend looking into how much you contribute to your savings and retirement accounts. If you’re not contributing the maximum amount allowed, consider increasing it to take advantage of compound interest.
Step 5: Invest Your Money
Investing your money can help you grow your wealth over time. Consider investing in a diversified portfolio of stocks, bonds, and mutual funds. Looking to consult a professional on how to get started? Get in touch with our team of Certified Financial Planners here!
Step 6: Plan for Taxes
Tax planning is an integral part of any financial planning process. Here are some things to consider when planning for taxes:
- Are there any tax law changes that could impact my finances in 2023?
- Am I taking advantage of all available tax deductions and credits?
- Should I consider consulting a tax professional?
Frequently Asked Questions
Q: Why is financial planning important?
A: Financial planning is essential to achieve your financial goals and minimize debt. It helps you evaluate your current financial situation, create a budget, set financial goals, reduce debt, and increase savings.
Q: How often should I review my financial plan?
A: You should review your financial plan at least once a year or whenever there are significant changes in your financial situation. We also recommend checking in on your progress towards your short- and long-term financial goals on a monthly or quarterly basis. This will allow you to see where there’s room for improvement or changes!
Q: What should I do if I have a limited amount of money to invest?
A: You can start small and gradually increase your investments over a period of months or years. Even small amounts can add up over time.
Q: When should I start financial planning?
A: You should start financial planning as early as possible. The earlier you start, the more time you have to achieve your financial goals.
Want to get to know exitfour’s CFP® professionals? Meet our team here and contact us today to start your journey!