7-item checklist to help keep your finances on track

7-item checklist to help keep your finances on track

Financial planning can prepare you for life events, such as buying a house or getting married, as well as everyday expenses and budgeting. To stay on track, it’s a good financial practice to have regular check-ins. Ally Financial’s guide can help you become more comfortable managing your money and keeping yourself on track.

Tip: To avoid getting overwhelmed, don’t plan to take on all of these at once. Consider spreading them across separate check-ins, maybe two or even four times a year.

1. Assess your current financial status

First, the big picture. Review your income, expenses and investments to identify any changes you want to make. The first time you do this, it might feel daunting — but over time and with consistent check-ins, it won’t be such a big task. The goal here is to get an aggregate view of the funds coming in and the funds going out, including investments.

2. Prioritize your financial goals

With your updated financial status in mind, set new goals or determine whether your current goals are still valid. For instance, maybe last year you decided to pay off your car loan. If you’ve since paid it off, those funds can be redirected to a new goal. Or maybe you have made significant progress toward building your emergency fund, and you don’t need to direct quite as much toward that goal.

This is your chance to check progress toward each goal and decide whether your financial strategy is still aligned. Again, the first time you do this, you might feel like it’s a long exercise, but as you check in regularly, you likely won’t need to spend as much time on each item.

3. Realign your budget

Similar to goal-setting, when you make a budget, you’ll want to account for upcoming life changes, like growing your family (say hello to monthly daycare costs), and your long-term goals (like saving for retirement). Play around with how you’re allocating funds until you find the right coverage for both your monthly expenses and your most important savings or debt repayment goals.

4. Check on your emergency fund

Having an emergency fund can help you avoid the stress of any unexpected financial events. If you’ve already built one, check that it’s still on track. If you’re nearing your goal, consider where you’ll redirect that money next.

If a rainy-day fund is on your list of goals, calculate how much to save for emergencies by determining your timeframe. The general guidance is to save three to six months of living expenses.

5. Manage your debt repayment strategy

This is a good time to check how you’re doing on debt management. Make a list of your debts, their interest rates and your progress toward repayment for each one.

If you haven’t set up a repayment plan yet, there are many methods you can employ, depending on how you want to prioritize payments.

6. Check your credit report

You can access your credit score for free or request free credit reports from the three major credit bureaus (Equifax, Experian and TransUnion). Review all your lines of credit, so you can quickly address errors, discrepancies or other issues that may negatively impact your score. Maintaining a good credit score can help you reap financial benefits in the long run, like more affordable insurance premiums and lower credit card interest rates.

7. Review your investments

If you’re investing toward retirement, check in on how you're progressing toward that goal. Consider setting up a retirement account and, if available to you, consider contributing to your 401(k), so you can take advantage of any matching contributions your employer may offer.

As you pay back debts or if you receive a raise at work, consider putting excess funds toward your retirement. Depending on your timeline, retirement can feel like a long way off — making it easy to put off — but if it’s an important goal for you, it’s vital to keep a consistent eye on its progress.

Monitor and adjust your financial plan regularly

Life circumstances change all the time, and conducting regular financial check-ins can help you stay agile. You might be surprised by how much more confident you feel when you’re in tune with where your money is going and how you’re working toward each of your goals.

This story was produced by Ally Financial and reviewed and distributed by Stacker.