Checklist icon with text, Financial planning checklist

What do you picture yourself doing in one year? What about five or 10? 30? Maybe you see yourself running a marathon, climbing up the ladder at your job, or mastering a new language. Whatever your goals may be, you probably need a road map — a plan of action — to achieve them. Financial goals, like building an emergency fund or sending your kids to college debt-free, are no different. That’s where the concept of financial planning comes into play.
 

What is financial planning?

When you think of “financial planning,” tasks like investing, taxes, planning for retirement, or working with a professional advisor may immediately come to mind. But really, financial planning is more than that. It’s all about understanding the money you have now, thinking about how you can use it to achieve your goals, and putting actionable steps in place to do so.  It takes into account all aspects of your finances, like your savings, emergency fund, debt management plan, career, and salary — plus your investments and retirement fund.

Financial planning is an ongoing process that involves managing your money in a way that helps you reach your financial goals — both in the near term and far in the future. It’s not about building a one-and-done budget or focusing solely on just one far-off dream. It’s a continuous and fluid practice that requires periodically evaluating your financial health, checking in on your progress, and making necessary adjustments to help you live your best financial life.

Why does financial planning matter?

If, like we mentioned earlier, you want to run a marathon in a year, you wouldn’t just sign up for a race and forget about it until the morning of. You’d put a thoughtful training plan in place — complete with long runs, short jogs, and rest days — so on race day, you’ll be confident you put in the work to make it across the finish line.

The same goes for financial goals. If you want to buy a home in five years, you have to make a plan to get there. That may include paying down debt for a year, for example, then ramping up your savings year-by-year for the next four. Or maybe, implementing a short-term investing strategy that includes some more active trading. Without a solid financial plan, five years could go by and you might not be any more prepared for a home than you were before.

Beyond helping you reach your targets, financial planning can provide you a greater sense of authority and confidence over your money. It starts by getting in touch with your assets and cash flow. Then, when you know where you stand financially now and how your habits will affect you later, you can take more ownership and control of your money and your financial future.

All of these factors can lessen financial anxiety and help you create a more positive and satisfying relationship with your money. And all it takes is implementing regular money management practices into your life.

Your Financial Planning Checklist

You don’t need to be a money expert to plan financially. The key is to stay on top of the different aspects of your financial life, be proactive (and realistic) in working toward your goals, and be prepared to handle change. If you’re ready to introduce personal financial planning into your life, start by implementing these routine check-ins into your schedule:

  1. Weekly
  2. Monthly
  3. Quarterly
  4. Yearly

Weekly

  • Review checking accounts.
  • Monitor credit card transactions.
  • Implement recurring transfers.
  • Microsave.

When it comes to your finances, it’s important to find a balance between being mindful of your money and obsessing over it, which can lead to even greater stress. So, instead of combing through all your accounts each and every day, practice implementing smart money habits weekly.

It’s a good idea to designate just a few minutes a week to review your checking account bank statement and credit card transactions. With online banking, you can easily review your recent transactions and account statements right from your phone or computer. If you’re just starting to build a budget or working to stay within one, weekly monitoring can help you track your spending without having to get into the minutiae of recording your purchases daily. (Plus, you’ll be more likely to quickly identify and respond to any fraudulent charges should your finances be compromised.)

You might also want to incorporate some tech into your weekly money routine. By setting up weekly or bi-weekly recurring transfers to your savings account, you can ensure you have money flowing to your account automatically — knocking off one item from your to-do list.

And if you prefer saving little-by-little, you may want to try a microsaving strategy. Using technology, like the Surprise Savings booster in an Ally Bank Online Savings Account, you can automatically transfer micro amounts of money to your savings account. All you have to do is link your checking account, and we’ll analyze it to identify small savings wins that will be safely transferred to your Online Savings Account.

Monthly

  • Revisit your budget.
  • Pay all bills on time.
  • Pay your credit card balance.
  • Review your investment portfolio.

Now that you’ve analyzed your weekly spending to set up a monthly budget, it makes sense to give it a quick review on a month-by-month basis. You’ll want to see how your spending, saving, and debt repayments are tracking and note where you may need to make tweaks.

It’s also critical that you pay your bills in full and on time each and every month. Setting up automatic payments is a great way to ensure this happens without you having to worry about it. It’s also a good idea to pay your full credit card balance each month, as leftover balance can incur expensive interest. If this isn’t possible, make sure you at least make the minimum payment required.

Finally, if you’re a self-directed trader who prefers active D.I.Y. investing, or if you are investing to reach goals in the mid- to short-term, you’ll probably want to keep an eye on your portfolio monthly or bimonthly. That way, you can monitor your progress toward goals like buying a car, renovating your home, or your honeymoon in Bali. Even if you aren’t making frequent trades, it’s a good idea to know where your securities stand so you buy, sell, and rebalance if and when needed.

Quarterly

  • Assess your personal goals.
  • Check your savings accounts.
  • Make budget adjustments.
  • Monitor your credit score.

As your wants and needs change, your financial goals are likely to shift as well. Hey, you couldn’t predict that a new iPhone would be released when you set up your budget two months ago! That’s why it can be smart to check in on your savings every few months to see how you are tracking against your current goals, as well as make room for new ones. And, as new situations arise, you may choose to allocate more or less money to certain goals — which is easy to do using the buckets tool in our Online Savings Account.

The circumstances of life can also impact your finances. A quarterly check in can be a good time to account for changes in income, windfall money, or other significant monetary changes, and make modifications if needed. For example, if you’ve undergone a pay cut at work, you might decrease your monthly investments. Or, if you paid off your car loan, you may now put those funds towards your grad school student loan.

Finally, if you have a major financial purchase coming up — like a new car, a house, or launching a new business — and you are going to need a loan, you may want to check your credit score. While this isn’t something you always need to do every three months, it’s a good idea to know where you stand so you can give yourself time to work on raising your score before shopping for a loan.

Take advantage of the smart tools in our Online Savings Account to help your savings grow.

Yearly

  • Evaluate your long-term investments and rebalance, if needed.
  • Assess your overall retirement savings strategy.
  • Adjust contributions to your IRA or 401(k), if needed.
  • Revisit your personal investing goals.
  • Analyze your credit report.
  • Check your financial health vitals.

When you are investing long-term in the stock market — whether for your retirement, to build personal wealth, or for another goal — checking your investment accounts too often (like with your daily morning coffee) isn’t always the best idea. The market fluctuates all the time and seeing periodic dips can cause panic and lead to emotional investment decision making. That’s why it’s typically fine to limit reviewing your retirement (or other long-term investment) accounts to just once or twice a year. That way you can monitor your progress and rebalance your portfolio if your asset allocation becomes misaligned with your risk tolerance and goals without wrecking your nerves.

This is also a good time to review your overall retirement strategy and accounts. That might include opening an IRA (individual retirement account), converting an existing traditional IRA to a Roth IRA, or rolling over any old 401(k)s from past jobs. Especially if any of your accounts charge expensive annual fees, you may want to explore less costly places to store your funds.

You might also want to adjust your retirement contributions, if necessary. For example, you might consider upping your contribution to your 401(k) by a percentage or two if your income has increased or you have additional room in your budget. Or you could turn on automatic monthly contributions to your IRA.

In addition to reviewing your retirement savings and investments, you may want to build or revisit your investment plan for other long-term goals. Investing in the market requires you to take on more risk than saving in a bank account, but also provides greater potential to build wealth in the long run. So, if you have personal or financial milestones you’re heading toward, you may consider opening a brokerage account (if you don’t have one) or exploring alternative investments as a means to take your savings further.

It’s a good idea to take advantage of your free annual credit report each year by visiting annualcreditreport.com, where you can request reports from TransUnion, Equifax, and Experian. This is a smart way to ensure your report is up-to-date and accurately reflects your credit history (which impacts your credit score), as well monitor for signs of identity theft.

Lastly, give yourself a big picture financial health check-up. Spend some time evaluating essential benchmarks like your debt-to-income ratio and net worth — so you know where you stand and in which areas you can improve in the year to come.

Financial planning for your future doesn’t have to be overwhelming or scary. It starts by knowing what you want to achieve down the road and mapping out actionable steps to get there. Those steps can start small — like implementing regular check ins across your finances. And with each step you take, you’ll grow more confident that you can cross the finish line of any money marathon.

Looking for a simple way to plan for your future?

Start by exploring Ally Invest’s account options.