Creating a financial plan can feel like an overwhelming task. There is paperwork to gather, future scenarios to consider and decisions to make. As a result, it sometimes gets placed far down on our “to-do” list, making way for seemingly more urgent and less complicated tasks. However, it is something that requires attention. Our clients who DO plan and have good habits are often in a much better position to achieve their financial goals than those who don’t.
Here is a short checklist of things to consider, whether or not you have started the financial planning process:
- Budgeting: Is your net income in line with your expenses? We often start here as it’s the cornerstone of financial planning. Without having a proper budget in place, it will be difficult or counterproductive to continue further down the list.
- Pay Down High-Interest Debt: Once a budget is in place and you start to see excess positive cashflow, we suggest paying down any high-interest debt, like credit cards, first. Doing so will alleviate the stress associated with this debt and eliminate a line item on your budget.
- Take Proper Advantage of Employer Benefits: It is important to understand what benefits are provided to you by your employer. You don’t want to leave money on the table by not taking full advantage of all available programs. For example, employers often offer a matching contribution to your 401k. You should be maximizing this benefit up to the match each year to help grow your retirement account(s). If you are not sure what benefits your employer offers, contact your Human Resources department. Ask about the following:
- 401k Employer Matching Contributions
- HSA (Health Savings Accounts)
- Insurance Plans
- Any other benefits like commuter or reimbursement, location pay, etc.
- Contingency or Rainy-Day Fund: We recommend our clients set aside 3-6 months of expenses in case of an emergency. For example, if you suddenly needed to replace your car, you would have funds accessible without your day-to-day finances being heavily impacted. We sometime see clients over-saving for emergencies. Doing so means you have less money to place into investments. Remember, the goal of this fund is to ensure you will be able to maintain the first three items of the checklist.
- Saving for Future Goals: Once you have completed steps 1 – 4, you are ready to consider the future. What goals do you have and how do you strategically save for them now? Examples include providing for your children’s education or starting to grow your investment accounts in a meaningful way. Once you’ve reached this step, the complexity increases and accounts must be analyzed with greater scrutiny to ensure you are set up for success. For example, if you are saving for education, is it best to open a 529 account or a UTMA for your children? For personal investments, is there a benefit to opening a ROTH IRA? This is when professional advice should be sought to ensure the best possible outcome.
- Learn to Embrace Productive Debt: Often people hear that debt is bad and the first thing you should do is eliminate it. Well, this isn’t always the case, some debt, for example a low-rate mortgage, can be beneficial if you can leverage it correctly.
- Yearly Look at Tax Optimization: As you move up in tax brackets, planning becomes increasingly complex. It is beneficial to see how you can optimize your tax impact and lower your potential tax exposure. This can be as simple as contributing more to your 401k as a tax-deferred account or by using strategies recommended by your accountant.
- Legacy: Do you want to help your children or grandchildren during your lifetime? Do you want to leave a lump sum to them after you’ve departed? Is there a charitable organization or educational institution to which you would like to donate? Perhaps you’d like to do some, all, or none of these things. These are important questions that come up during financial planning. However, it’s important to have a good financial foundation before taking steps to implement your legacy plan.
Financial plans evolve throughout life. Having one is critical to get a sense of where you are, what your goals are, and how to achieve them. Our team is ready to guide you.
Summary:
The blog post outlines eight foundational steps to simplify and kickstart your financial planning journey. It begins with creating a clear budget to align income and expenses, then prioritizes paying off high-interest debt like credit cards to reduce financial stress. The article emphasizes taking full advantage of employer benefits such as 401(k) matches, health savings accounts, and other perks that often go underutilized. Building a 3–6 month emergency fund, setting aside savings for future goals, and strategically using low-interest debt are highlighted as keys to long-term flexibility. Finally, it encourages annual tax optimization and intentional legacy planning to create a well-rounded and adaptable financial strategy.
Disclosure:
Green Ridge Wealth Planning, LLC is a registered investment adviser. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment/tax advice. The investment/tax strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment/tax strategy for his or her own particular situation before making any investment decision(s). You are responsible for consulting your own investment and/or tax advisor as to the consequences associated with any investment.
The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of the AUTHOR, may differ from the views or opinions expressed by other areas of Green Ridge Wealth Planning, LLC, and are only for general informational purposes as of the date indicated.