You must take care of your financial health as much as your physical and mental health. Understanding where you stand helps you make smart financial decisions to achieve financial success. Whether you are in over your head in debt or just want to create a successful financial future, this checklist can help you determine where you stand and what changes you must make to reach your financial goals.
1. Take Financial Inventory
Reaching financial goals requires knowing your current assets and liabilities so you can decide what steps to take.
Gather all bank, investment, and retirement account statements to check your assets. Also, list any physical assets you own, such as houses or cars. Next, add the values of each asset or account to get the total value of your assets.
Once you know your assets, gather all liability statements. This includes your mortgage, car payments, credit cards, and student loans. These are your liabilities. Your goal should be to have your assets greater than your liabilities. If they are not, it is time for some adjustments.
2. Review your Budget
If you do not have a budget, create one. If you have one, review it. A budget helps you reach your financial goals by ensuring your income goes toward the right things, such as paying off debt and saving for future goals.
In your budget, make sure you have the following categories:
- Emergency fund savings
- Debt payoff, especially credit cards
- Retirement savings
3. Name your Goals
When you know your budget, you can create goals beyond emergency savings and retirement. Set short, mid-term, and long-term goals.
A few examples include paying off student loans, buying a house or car, saving for a university education or paying off your mortgage. Include your goals in your budget based on their timeline and how much you can save.
4. Review your Retirement and Mortgage Strategies
Paying off your mortgage before retirement ensures a much smoother retirement without financial stress. Saving for retirement is important, you should consider saving at least 15% for retirement while also focusing your budget on paying your mortgage off early after paying off other consumer debts.
5. Plan for Tax Filing
Planning now for tax time is important. The more prepared you are for the tax season, the easier it is to file your taxes. Talk with a professional about ways to minimize your tax liabilities throughout the year to ensure you do not have a financial crisis at tax time.
If you do not know where to start or have too much debt and cannot get ahead, Creditaid is here to help. We are a Credit Counselling agency in Winnipeg that has been helping Manitobans get out of debt since 1992 and is now also licensed to help clients in Saskatchewan, Alberta & BC.
We can help you create a plan to get out of debt and budget moving forward. Our professionals can help you prioritize your goals and figure out how to reach them so you can live your best life now and in retirement.
We can help you deal with your debt. Schedule your free initial credit consultation.