Improving your personal finance requires some work. There are several things you need to do. But unfortunately, you may not even remember some of the important tasks you need to complete to get your finances back on track. This is why you need a financial to-do list. It’s the only way you can manage your financial life one step at a time until you reach your ultimate goal.
At the beginning of every year, I normally create a list of things I must do concerning my finances. From reviewing my budget to calculating my net worth, there are certain tasks I tick off my checklist before the year runs out. This enables me to get my finances back on track and achieve my goals.
In this post, we’ll look at some of the essential things you must have on your financial to-do list to level up your finances. Let’s dive in!
What’s A Financial To-Do List?
A financial to-do list is a list of written tasks concerned with one’s finances that one needs to accomplish within a certain time frame. This can help create a clear direction, enabling you to purposefully pursue the goals that matter.
How To Create A Financial To-Do List
The first step to creating a financial to-do list is self-reflection and evaluation. This is you seriously thinking about your financial situation, the decisions you’ve made, and the consequences that may have followed. Why is this important? You can’t find a headway if you don’t understand your current situation and where you’re coming from.
Every decision you make toward your financial future must stem from the experiences you’ve had with money. For instance, if you have been careless with credit, it’s normal that you’ll want to take a better step as you try to improve your finances moving forward. In a nutshell, you simply don’t want to make the same mistakes.
Another crucial aspect of creating your personal finance to-do list is to prioritize the right things. Since you can’t complete several tasks at once, you have to begin with the ones that are most important to your financial situation. For example, would you rather buy a new car or pay your credit card debt that is long overdue?
Lastly, tracking your progress is key! For every task you complete on your checklist, be sure to examine how it has impacted your finances.
13 Things Your 2024 Financial To-Do List Should Include
Are you ready to create your financial to-do list? Here are the vital things that should be on it:
1. Prioritize Budgeting
Budgeting remains one of the most essential steps to manage your money effectively. So when thinking about things your financial to-do list should include, it would make sense to keep budgeting in mind.
You need to examine your spending plan every month. This is because when you overspend, your savings goals can be affected. You can even run into debt as you try to cover some of your living costs. But one way to handle this situation is by building a monthly budget. This way, you’ll be able to review your expenditures to see what needs to be adjusted or improved.
2. Check Your Credit Scores
Some people spend years without thinking about their credit scores. That’s not an advisable thing to do, especially if you rely heavily on credit. Your credit score simply shows your current credit situation and how well you are handling debt.
While helping creditors determine how much you can borrow, your credit score can also affect your ability to rent an apartment or even be hired for some positions.
This is why it’s important to know what your credit score says, so you can take action on time and prevent some serious consequences. Thankfully, there are various ways to check your credit score. You can approach your bank or credit card company to check it for free.
3. Calculate Your Debt-To-Income Ratio
Understanding your debt-to-income (DTI) ratio is super important. It refers to how much you earn and the amount of outstanding debt you have to pay.
When you calculate your DTI, you can determine if you’re financially healthy or not. Total up all of your debts and divide that amount by your gross income to calculate it. When you approach creators for a mortgage or loan, they usually have to review this figure to see if you are financially stable enough to pay off the debt.
Your DTI may inform you whether there are any red flags in your finances, even if you have no intention of applying for a loan. A DTI of 36% or less is typically considered normal, whereas a DTI of more than 43% is regarded as a serious issue.
You should think about this when creating your financial to-do list.
4. Calculate Your Net Worth
Having an updated net worth statement should definitely be on your financial to-do list checklist. I usually calculate my net worth quarterly. It helps me to determine how I’m progressing financially.
Calculating your net worth is quite simple. All you have to do is sum up all your assets and subtract your liabilities (like debt, for example).
Bear in mind that cash, investments, vehicles, real estate, and other financial possessions can be considered assets. Debts like mortgages, student loans, credit card balances, and car loans are liabilities.
Once you can determine your net worth, you can then develop a strategy to raise it by paying off debt, growing your investments, or increasing your savings.
5. Create New Financial Goals
One way to stay motivated when trying to improve your personal finance is by setting new financial goals, especially at the beginning of each year.
Now think about this—did you achieve your goals last year? If you didn’t, how can you change that this year? It’s important that you reevaluate your strategy for creating and achieving financial goals.
There are short-term goals and long-term goals. You need to know which ones you are trying to accomplish. For example, setting up an emergency fund, clearing a credit card debt, or planning a large vacation are short-term goals. Purchasing a home, launching a business, or funding your children’s college education are long-term goals. Whatever goal you have in mind, ensure it’s reachable. Be realistic.
By the way, if you are looking for a more comprehensive guide on the best financial goals to set this year, check out these 10 good financial goals to achieve this year.
6. Take Advantage Of Your Company’s 401(k) Match
Some employers make contributions to employees’ 401(k) retirement accounts as part of the benefits they receive working at the company. This is known as a company or employer match.
A 401(k) match is one of the smart things to keep in mind when creating your financial to-do list. It’s basically free money. If your employer offers a match, do well to take advantage of it as soon as you can.
A portion of your income can be invested in a 401(k) before taxes are deducted, and the money in the account can grow tax-free until you take it out. The amount you withdraw from your 401(k) account when you reach retirement and begin making withdrawals is subject to taxes.
Just as your bank account holds money, your 401(k) holds investments. It allows you to tap into various investment options, including stocks and mutual funds.
Moreover, you should know that every employer provides a unique kind of match. For instance, if you contribute $5 of your salary, your company may match 100% of the contribution. Get in touch with your company’s human resources department to find out what steps you need to take to receive the 401(k) match.
7. Get Life Insurance
If you don’t have life insurance currently, you need to get one immediately. It’s one of the best financial decisions you can ever make to protect your family.
The good thing about life insurance is that you can afford it. For example, you can find a $1,000,000 policy for 20 years for less than $30 a month.
Life insurance provides the financial support your family needs in the event of your death. The money can be used to cover funeral costs and even daily expenses.
It doesn’t matter if you aren’t married with kids. As long as you have a family member depending on you, you need life insurance.
8. Check Your Credit Report
If you don’t review your credit report multiple times a year, you are doing the wrong thing.
Examining your credit report will help you address debt concerns and determine whether anything wrong is being done to your accounts.
Equifax, TransUnion, and Experian are three major credit bureaus that offer a free credit report to consumers once a year. This means you can receive one from each, for a total of three per year. Even better, you can arrange for one credit report to be sent to you every four months.
9. Create An Emergency Fund
No matter how little you save, emergency savings can serve as a safety net to protect your finances. There are some unforeseen circumstances that may require you to break the bank, spending a lot of money you never prepared for.
Imagine you accidentally drop your smartphone in the toilet bowl or have your car’s windscreen smashed—how do you cover the costs to fix these things if you aren’t financially prepared? You’ll probably resort to using credit. This is one reason you must build an emergency fund as soon as possible.
Aside from unexpected expenses like auto repairs or a leaky roof, an emergency fund can be very beneficial if you suddenly lose your job or have reduced hours.
If you want to learn more about how to prepare for emergencies, here’s a post that will show you the basic steps to set up an emergency fund in no time. Check it out when you can.
10. Find The Right Investment Plan
Investing is one thing that should be on your financial to-do list. When you invest wisely today, you’ll have something tangible to rely on after retirement.
Of course, many people think the best way to prepare for retirement is just by saving money. But the question is: how much should you save over time to ensure that it will be enough to cover all your expenses for as long as possible when you retire? Investing, however, can really grow your savings exponentially.
For example, investing $1,000 in a retirement account that has an annual 8% return will earn you $21,724 after 40 years. If you decide to put an extra $1,000 instead in the same account for 40 years, you’ll have $301,505.
Now let’s picture a bigger goal. Say you started with $10,000 and put an extra $10,000 in the account with an 8% annual return, you’ll earn $3,015,055 after 40 years. Apparently, investments will take time to yield the right profit, but you’ll certainly be grateful you chose to invest initially.
11. Cut Out Unnecessary Expenses
This is another thing you should have on your financial to-do list. Cutting down on your spending will help free up cash to contribute to your savings accounts and even pay off debts.
If you have a budget, this should be easy. All you have to do is examine your various spending categories and see if there are any areas where you overspend. For instance, how much do you budget for recreation? Since it’s not an essential bill, you can cut it out or drastically reduce the amount of money you allocate to it.
Moreover, you can check your subscriptions and ditch the ones you aren’t using. Remember, most of these subscription payments are automated. If you don’t cancel the ones you’ve stopped using, they’ll keep stacking up costs.
If you need more insightful ideas on how to reduce your living costs, here are 25 frugal living tips you should know. They’ll help you save a ton of money.
12. Get An Extra Income Stream
Having an extra income stream means there will be more money to fulfill your financial commitments. You won’t struggle to afford rent, pay utilities, and other essential bills if you learn ways to make extra money to complement your salary.
For example, freelancing a few hours every day as a writer, proofreader, or virtual assistant can help you make a few hundred dollars every week. If you want to step up the hustle, you can decide to start an online business, such as affiliate marketing and print-on-demand. These business models are quite profitable. They can make you thousands of dollars per month.
13. Fill Out An Emergency Binder
Do you have all of your personal information and important documents in order? It’s funny how many families today do not have their important financial information organized in one place. If you fall into this category, you need to create an emergency binder as soon as possible.
Passwords and bank account numbers are examples of personal financial data that should be kept in an emergency binder. You can keep records of your bills, insurance information, and personal information about you and your household. If something were to happen, you wouldn’t have to worry about losing this information. You’ll be able to retrieve what you need without going crazy.
Final Thoughts On Creating Your 2024 Financial To-Do List
Busy people often create a to-do list to remind themselves of the tasks that need to be completed. This improves productivity at work and helps one to stay organized.
Now when it comes to managing money and making important financial decisions, it’s advisable that you have a personal finance to-do list. It’s a brilliant way to keep your financial responsibilities organized and goals achievable.
Thankfully, this post has shown you how to do just that. But if there are other things on a financial to-do list you feel this post could have discussed, do well to mention them in the comments.
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