If you want to manage your money better, having a financial checklist can go a long way in giving you that push you need. Having a list of things to do can put some semblance of order in your life. It can also give you the chance to make the most of every effort you put into your finances. A checklist shows you financial areas to focus on so can be a more effective money manager.
The better you can manage your money, the higher the chances that you get to reach your financial goals. You have a bigger chance of retiring early and enjoying life, paying off your mortgage and freeing up your budget, or even having the chance to travel and see different places. This makes it all the more enticing to be able to manage your finances better. Here are a few of the things you can include in your checklist to help you do just that.
Create a comprehensive budget
On top of your financial checklist is having a comprehensive household budget. This is an excellent starting point and a very handy tool when you want to manage your funds better. The idea when it comes to having a household budget is to start from a basic formula. This will help you understand how to budget and make the process less scary.
This is because a lot of people forego having a budget because they believe that it entails a complex formula involving their income and expenses. Some people might have a bit complicated budget but you do not have to do the same at the start. You just have to simplify it by writing down all your income and all your expenses.
While you do this, it is important that you do not overlook any item, especially in your expense side. The last thing you need is overlooking a payment and then get hit with penalties and interest. Not to mention how it will affect your credit score. Start with a basic budget and build your way up from there just be sure to include every single item in your budget.
Trim down excessive spending
If you want to manage your budget better, one of the things you have to include in your financial checklist is trimming down excessive spending. This process starts from your budget where you can see expenses you make in any given month. You have to pinpoint and identify expense items you can cut down on.
If you notice that your food budget seems to increase from one month to the next, look at it a little more closely. Are you getting used to ordering take-out food or ordering one at home because you do not have time to cook? You are in the office the whole day and might not have the energy to cook when you get home.
The idea is to plan ahead and it starts from your groceries. You can buy in bulk the things you need and prepare your meals ahead of time. One weekend, prepare your meals for the whole week so you do not have to cook the whole meal from scratch every single day. You can prepare them so you have all the ingredients ready and cooking will be a breeze. You can even cook a little extra so you have something to bring to the office the next day.
List down your financial goals
If you are putting together a financial checklist, you need to benchmark them against your financial goals. This is the ultimate direction you want to head on out to and as such, you base your decisions on them. If your checklist includes the need to save more for retirement, this means that your financial goal is to retire early so you can enjoy life at an earlier stage.
This shows the importance of having a goal in life because your actions at present will guide you towards your financial goal. It helps you put together what you need to do at present. If your goal is to pay down your student loans faster, then you could be looking for a side gig and putting that extra money into student loan payments.
Work with your partner
This tip is helpful for couples who are managing their finances together because working together makes the burden lighter. In fact, if you are married and you are solely managing and making sure your finances are in order, it will be a tough challenge. The two of you has to put the work in to make sure that you are able to manage your finances better.
As you both go through your financial checklist, you need to consider both your income and expenses to help you take control of your finances. One of you might be spending for an item that was not originally in your budget. It is also possible that your source of income is impacted by a recent development that the money coming in is lower than what you budgeted for.
These things make it important for you to work as a couple when managing your finances. You need to be transparent with your finances so you do not put your finances at risk. Choosing to keep a big purchase or a dip in your income a secret will not only ruin your finances, but it can also put a dent on your relationship.
Pay down your debts
When it comes to having a financial checklist, your debt payment needs to be a top priority. Paying down your debts gives you the chance to free up your budget. The bigger your extra money becomes, the more you can save for your future. There are a few debt repayment programs you can look into to help you address your payments.
At the very minimum, you have to be current with your payments. If you start falling behind, the amount you have to pay just keeps getting bigger and bigger. Apart from one month’s payment adding to the next, lenders start to put fees and other penalties on your account. This adds to your burden and can make it hard to catch up.
As mentioned earlier how important it is to have a comprehensive budget to help you with credit score, this is because keeping tabs and paying on time contributes to 35% of your credit score computation according to FICO. If you send late payments, your score can take a dip. Once this happens, you can find it more difficult to secure loans or be assessed with high rates for future loans.
Identify learning opportunities in your financial checklist
There is a good chance that you will identify areas where you could have done better and that is understandable. What matters at this point is what you do with that information. You can take that and sulk in one corner of your house hoping you could have done better or you can do something about the situation.
One of the best outcomes of this situation is to pick out the lesson it has and learn from it. You come out smarter and more informed. If the same situation presents itself in the future, you already know how to handle it and not make the same mistakes as you did in the past.
Creating a financial checklist should always be preceded by a goal such as a desire to manage your finances better. You need to have a reason why you need a checklist because it can change from one goal to another. The idea is to create one because you want to improve your current situation.