Joe’s 10 Point Checklist For Financial Wellbeing

We all want to be financially responsible and prepared for what life might bring, but it helps to have a road map to confirm that we’ve taken the right steps.  Here is my list of the essential financial responsibilities you should take care of for yourself and your family.

1.       Know your monthly spending.  I recommend getting a basic accounting software like Quicken or an online version like Mint to track your expenses.  Once you know what you are spending, you can come up with a budget and savings goals.

2.       Have six months of savings on hand at all times.  Once you reach this goal, you should strive to achieve twelve months of savings.  If your family has two wage earners that earn similar amounts, then you most likely will be fine with only having half of the savings that a single wage earner family should have. 

3.       Pay off your debts.  Start with the highest interest debts. 

4.       Get a last will and testament done by an attorney.  Spend a few hundred dollars more than the self-preparing the documents with software.  This is an important and long-lasting document.  Attorneys should be able to do this for $500-$700 and it is alright to shop around until you find one that will.

5.       Organize your financial documents and information.  You should be able to find important documents quickly.  This includes bank, insurance, investment, and tax documents.  They shouldn’t be put back into the envelopes and thrown into some random box or drawer.

6.       Save for retirement only if you have paid down your debts and taken care of emergency savings.  When you do save for retirement, be very aware of the investment fees you are paying.  You should be able to invest for less than 1% in investment brokerage fees.

7.       Get yourself some private carrier life insurance.  You need at least enough coverage to pay your mortgage and pay 10 years’ worth of your salary if you have a younger family.  Don’t rely on employer provided group life insurance. Your job may not always last and this group insurance won’t follow you to the next employer.  I recommend going with a mutual life insurance company like Northwestern Mutual.

8.       Get private coverage disability insurance, especially if you are self-employed.  Disability insurance is expensive but you most likely won’t have workers compensation coverage if you are self-employed.

9.       Don’t stress too much about saving for retirement.  Enjoy life along the way.  Just make sure you are contributing something each year.  Letting compound interest works its magic over time is much better than trying to catch up later in life with large deposits.

10.   Give a little bit to charity.  It helps you to be grateful for what you have when you can give a little away.