Many people enjoy a long weekend when Memorial Day or Labor Day comes around. Usually, it involves cooking out, visiting with family and friends, or even tackling a few things around the house. Another thing you may want to consider is tackling your financial to-do list on your day off.
What Should You Have on Your Financial To-Do List?
If you don’t have a financial to-do list, you’re not alone. Many people don’t consider the things you need to do on an annual or even quarterly basis to maintain your finances. Here are just a few things you may consider adding to your to-do.
1. Do An Annual Financial Checkup
Once or twice a year you should take a moment to review your finances as a whole. Determine a few things about your finances like where your net worth stands and where you are in terms of meeting your financial goals. You should also take note of your credit score. Are there any new developments or major changes in your finances since the last time you reviewed them? After you’ve taken a close look at your finances, you can create a plan.
2. Educate Yourself on the New Tax Laws
Have you had a chance to review the new tax laws? There may be significant changes to the way you need to prepare for tax season. Take some time to look everything over and determine if any changes need to be made on your part.
3. Alter Your Income Tax Withholding, If Needed
Once you’ve reviewed the new law, you may find you need to alter your income tax withholding to be more or less than before. It is typically a good idea to have more withheld than you think you need. This ensures you won’t have to pay taxes in April (or won’t have to pay as much).
4. Review Your Budget and Make Alterations
You should review your budget at least once every three months (if not every month). Identify places where you can save money, cancel unused subscriptions, and work out a plan to save more and pay off debt. Financial freedom starts with a budget!
5. Calculate Your Debt-to-Income Ratio
Each of the to-do list items above will have you looking closely at your finances and, quite possibly, your debt. Determine what your debt-to-income ratio is. If your debt is more than you are bringing in, begin planning an aggressive payoff method as soon as possible to drive your debt down.
6. Figure Out Your Net Worth
If you don’t carry much debt, you may be more interested in determining your net worth and what it may take to raise it. To determine your net worth, simply take the value of your assets and subtract your debt. Read about calculating your net worth here.
7. Assess Your Savings and Emergency Fund
Do you have enough money saved to cover a $1,000 emergency? If so, consider beginning to save up six months worth of resources. You never know when you may need those savings and you’ll be ever-so-thankful you had them when/if the time comes.
8. Set Financial Goals
Once you’ve taken a good look at every aspect of your finances, it is a good time to sit down and think about where you want to be in six months, a year, five years. If you’d like to be debt free five years from now, set the goal and come up with a plan to do so. Without goals, you don’t know where you’re going.
These are just eight things you should consider adding to your financial to-do list. Depending on your personal finances, you may have fewer (or more) items on your to-do list.
Readers, do you write out a financial to-do? What is on your list?