Creating A Financial Wellness Checklist

5 min read

Creating a Financial Wellness Checklist

Your whole financial status or financial well-being is unique to you. Frequently, we gauge our financial well-being based on our income, credit score, and overall net worth. In truth, your financial well-being is determined by elements that reveal a bigger narrative about your relationship with money. This includes your ability to manage your financial commitments, your confidence in your financial future, and your ability to make financial decisions that allow you to enjoy your life.

As Americans continue to face financial stress as a result of rising gas and food prices, taking stock of your current finances and planning for the unexpected can help you make more informed financial decisions and set new financial goals. If you feel the same way, you must realize that avoiding your finances is not the solution. In fact, the inverse is true. Financial wellness can help reduce anxiety by empowering you to take control of your finances and work toward a brighter future.

8 Questions to Ask Yourself to Improve Your Financial Situation

This checklist is a set of questions that will help you determine where you stand financially and what your future goals should be. Given that everyone's situation is unique, no two checklists will be identical, and this is not a one-time activity. It should be reviewed at least periodically to ensure that you are still on track to meet your financial objectives.

Here are some main questions you should ask:

1) Is There Enough Money in My Savings Account for Emergencies?

As a general rule, you should have enough money in your savings account to cover 3 to 6 months of expenses. The goal is to have enough money to cover a large unexpected expense or to keep you going if you lose your job.

If you're struggling financially, even small savings can help. Developing a habit of consistently saving money is more important than how much you can put away at any given time. Consider making it a goal to deposit money into your savings account on a monthly or weekly basis. It may take sometime to [build up your fund], and you may need to dip into it at times, but if you start saving consistently, you'll eventually get where you want to be.

Resources: Help! Why Can't I Save Money?


2) Am I Spending More Than I Earn?

Keeping track of your account balances is the simplest way to determine if you're spending more than you earn. You should be fine if they continue to rise over time. If your account balance is decreasing, this could be a red flag. However, it's important to note that overspending isn't solely the result of lifestyle creep, or adding more expenses as your income grows. It's also possible that your dollars aren't going as far as they used to.

Budgeting is essential if you are prone to overspending. Specifically, the process entails eliminating unnecessary expenses or finding ways to generate additional income. However, it is best to try to live below your means whenever possible to avoid the temptation to spend more than you have on hand.

While making these decisions can be difficult in the short term, the added security that comes with meeting your financial goals is usually worth the effort.

Grab your FREE budget template here.

Resource: 10 Easy Ways to Manage Your Money Better

3) How Can I Improve My Credit Score?

Unfortunately, there is no one-size-fits-all credit-improvement solution. If you have a collections account on your credit reports, building credit may be more difficult for you than for someone who is just starting out and has no negative marks on their reports. The  importance of paying all bills on time, including credit cards, medical bills, student loans, and buy now, pay later purchases. According to FICO, if you have excellent credit, just one late payment that is more than 30 days old can deduct more than 80 points from your credit score.

Source: Vincere Wealth

Aside from that, it is critical to pay as much above the minimum payment as possible each month. Ideally, you should try to pay off your credit card balances in full, but if you can't, we recommend paying more than you spend to reduce the total amount you owe.

4) Do I Have a Strategy for Debt Repayment?

If you have unpaid balances, you must devise a debt-reduction strategy. However, the plan may differ depending on the number of balances in your name and the interest rates charged on each of those accounts. If you only have one unpaid balance, the strategy is straightforward. Simply make the largest payment you can until the balance is completely paid off.

If you have multiple debts, however, it is a good idea to stick to a debt repayment plan.

The debt avalanche method is one popular strategy. You pay the minimum on all of your accounts except the one with the highest interest rate. You'll want to make as large a payment as possible on that card, and you'll keep doing so until the balance is paid off. Then repeat the process on the account with the next-highest interest rate. The disadvantage of the debt avalanche method is that it can take some time to see significant progress, especially if your highest-interest debt is fairly large.

If you prefer instant gratification, you could try the debt snowball method, which involves tackling your smallest balance first. This method allows you to experience a series of small victories at the start of your debt-paying journey, which may help you stay motivated to continue making progress.

Source: Vincere Wealth

Read more: Debt Snowball vs. Debt Avalanche: Which Is Better for Paying Off Credit Card Debt?

5) How Much Are My Retirement Savings Worth Today?

When it comes to retirement savings, it's all about knowing where you stand today and how much money you'll need to retire comfortably.

Consider how much you'll want to spend each month when you're ready to retire. Then, spend some time calculating how much money you'll receive from non-investment sources such as Social Security. The difference between those two figures represents the amount you should aim to save for retirement. While that advice may appear daunting, especially given the recent volatility in the stock market, it's important to remember that saving for retirement is a long-term goal. Making a habit of contributing to your accounts on a regular basis is what will truly make a difference in the long run.

If you've only recently begun saving, look into any options your employer may offer, such as a match incentive program to help you increase your savings or an automatic deduction from your paycheck. If your employer does not provide a retirement plan, you can still prepare by opening your own tax-advantaged retirement savings account.

Roth IRAs are a popular place to start because they allow for tax-free withdrawals, which means you pay taxes on them when you make the contribution rather than when you withdraw the money.

They are, however, only available to those with lower incomes. For example, if you are a single filer under 50 and your MAGI is less than $138,000, you can contribute up to the $6,500 limit for tax year 2023. Higher-income earners may be able to contribute less, but those earning more than $153,000 are ineligible.

Source: Vincere Wealth

You can also fund a traditional IRA or 401(k). However, you must be prepared to be taxed when withdrawing funds from your account.

Resources: How Much Should I Put Away For Retirement in My 20s? 

6) Do I Have Disability Insurance if I Am Unable to Work?

Disability protection insurance, as the name implies, is designed to help you replace lost income in the event that you become disabled and are unable to work. There are usually two types of plans to choose from: short-term disability insurance and long-term disability insurance.

Short-term disability insurance is meant to help you while you are recovering from a short-term illness or injury. If your company offers any benefits, you should think about enrolling. Typically, these options will be less expensive and have fewer restrictions than policies offered by insurance brokers.

According to the Bureau of Labor Statistics, short-term disability insurance costs about $0.05 per hour worked, while long-term disability insurance costs about $0.06 per hour worked. Once you've narrowed down your options, total your monthly expenses and compare them to the amount of income you'll receive from the plan being offered to you. Disability insurance can be purchased through an insurance broker if you are self-employed or require additional coverage. However, keep in mind that these programs come at a cost, and insurers may impose eligibility requirements.

7) Can My Life Insurance Cover My Family?

Life insurance is designed to help your loved ones financially if you die unexpectedly. While there are many different types of life insurance to choose from, most people opt for a term policy, which lasts for a set number of years, or a whole policy, which lasts until death as long as premiums are paid.

Individual factors influence the need for life insurance. As a general rule, if you will leave behind any expenses when you die, you should consider purchasing a policy to cover those costs. The following step is to determine how much coverage you require. Consider the costs of some of your largest expenses.

Consider whether your house needs to be paid off, whether your children need to go to college, and whether your spouse will need to rely on your retirement income. Adding those costs together will give you an idea of how much coverage you may require.

Learn more: What is the Best Age to Buy Life Insurance? 

8) Do I Have a Current Will? 

If you don't already have a will, you should make one as soon as possible. In the absence of a will, your state will typically determine the disposition of your estate. This is known as probate. Furthermore, because each state has different rules governing how probate works, the process is frequently costly and time-consuming.

Most people have put in too much effort to have someone else decide what happens to their estate. That is why it is critical to have the proper documents in place. It's important that you review your will at least once a year after you've written it. Some years, it may remain the same, but if any of your wishes change throughout the year, it's best to get everything updated as soon as possible.

Creating a financial wellness plan is a continuous process. Anticipating and responding to unexpected changes is part of the plan. Meet with a reliable financial partner to get started on your journey.

How Can You Make Financial Changes?

Your financial wellness checklist should serve as a guide for creating and maintaining a budget, meeting goals, and making necessary adjustments along the way.

Here are a few key ways to improve your financial situation:

1) Keep Track of and Manage Your Cash Flow.

Analyze your spending in order to better understand and manage your cash flow. Consider your spending on utilities, groceries, and entertainment. Create a monthly budget to save money and reduce non-essential expenses.

Source: Vincere Wealth

Resource: How to Prioritize Your Financial Goals? 

5 Mistakes to Avoid When Creating a Budget

2) Consider Inflation

While experts predict that inflation will fall, it will not happen overnight. Inflation reduces the purchasing power of your money, so consider the rising costs of goods year after year. For example, if mortgage interest rates continue to rise, a $400,000 house today may become less affordable in the future. If purchasing a new home is one of your top priorities, ensure that your savings plans account for inflation.

3) Keep Track of Equated Monthly Installments (EMIs)

Equated monthly installments (EMIs) are the monthly payments you make to your lenders. Mortgages, auto loans, and student loans are the most common EMIs. Ideally, you should have all of these loans paid off by the time you retire. Carrying debt into retirement, particularly student debt, can deplete your savings and social security payments. Work these payments into your monthly budget and see where you can save money to meet your obligations.

4) Find a Reliable Partner to Assist You With Your Financial Wellness Checklist

Creating and following a thorough financial wellness checklist is the most effective way to assess your situation. With proper budgeting, investing, and retirement saving strategies, you can easily maintain or even improve your current quality of life.

I hope this information was helpful! If you have any questions, feel free to reach out to me here. I’d be happy to chat with you.

Understanding your financial situation is made easier with the assistance of a dependable financial partner such as Vincere Wealth. We'll keep you up to date on the latest trends and assist you in meeting your financial objectives. Get in touch with us today to speak with a knowledgeable industry expert. Together, you can cross items off your financial wellness checklist and set yourself up for a prosperous year.

Connect with Josh

About the Author

As Managing Partner of Vincere Wealth, Josh assists clients in navigating financial challenges and making sound financial decisions. Having someone guide you in making sensible financial decisions today can have a substantial impact on your future financial wellbeing. Josh takes great pride in guiding customers through the complexities of taxes, real estate, businesses, employer stock and international financial planning.

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If you're interested in an investment advisory or financial planning relationship, please consider Vincere Wealth Management.

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This post is just for informational purposes and is not meant to be financial, legal, business, or tax advice. Regarding the matters discussed in this post, each individual should consult his or her own financial advisor, attorney, business advisor, or tax advisor. Vincere Wealth Management accepts no responsibility for actions taken in reliance on the information contained in this article.

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Creating A Financial Wellness Checklist

Your financial situation is unique to you. We often measure our financial health by income, credit score, and net value. In reality, your financial well-being is determined by factors that indicate your relationship with money. This includes your financial management skills, confidence in your financial future, and ability to make life-enjoying financial decisions.

Creating A Financial Wellness Checklist

Your financial situation is unique to you. We often measure our financial health by income, credit score, and net value. In reality, your financial well-being is determined by factors that indicate your relationship with money. This includes your financial management skills, confidence in your financial future, and ability to make life-enjoying financial decisions.

Creating A Financial Wellness Checklist

Your financial situation is unique to you. We often measure our financial health by income, credit score, and net value. In reality, your financial well-being is determined by factors that indicate your relationship with money. This includes your financial management skills, confidence in your financial future, and ability to make life-enjoying financial decisions.

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