Personal finance covers a very broad range of topics. No one knows it all. It’s a continual process of self-awareness and self-improvement. It affects more than you—it’s about your family, your values, where to direct your assets, and intentions. So run through this checklist and pat yourself on the back when you’ve taken steps in the right direction. Prioritize what you want to tackle next and be more aware of what you don’t know—yet.

Don’t worry if you don’t know all the answers. Even Einstein had to do his research. Just make a list of questions to discuss with your advisor or to research yourself. Financial Planning Literacy may help answer some of these questions.

“If we knew what we were doing it would not be called research, would it?”

~ Albert Einstein

Protecting Your Assets

  • Have you checked your credit report in the past year?
    You are entitled to one free credit report each year. Checking this regularly can help head off identity theft problems.
  • Should you own life insurance?
    • If you already own life insurance:
      • Will it cover the mortgage and get the kids through college? How much is enough? Too much?
      • Do you know what type of coverage you have and why?
        – Term?
        – Whole life?
        – Universal?
        – Variable?
      • Should you hold your life insurance in an irrevocable life insurance trust?
  • If you have disability insurance, are you paying your premiums with after-tax dollars or pre-tax dollars?
    If you pay with after-tax dollars, your future benefits will be tax-free.
    • Does your policy cover you if you can’t perform your own occupation or if you can’t perform any occupation?
  • Do you understand the features of your health insurance coverage?
    • What’s your co-pay?
    • What’s your deductible?
    • What’s the maximum your insurance company will cover?
  • Should you buy long-term care insurance?
    This type of insurance typically covers nursing home care or home health care. These costs are not usually covered under standard health insurance plans.
    • If you can’t take care of yourself later in life, what’s your game plan?
    • Do you have adequate resources to pay nursing home costs without depleting your nest egg too soon?
    • If you have coverage, does your policy cover home health care as well as institutional care?
  • Do you have property and casualty insurance? Including:
    • Homeowners’ or rental?
    • Auto?
    • Personal liability?

Basic Money Management

  • Have you created a personal balance sheet that shows your net worth?
    • Do you have enough money that’s accessible should you need it?
    • Do you have an emergency fund in place?
    • Do you have more assets than debt?
    • Have you updated your balance sheet in the past two years?
  • Have you put together a budget that specifies how much you will save each month?
    • Have you stuck to it?
    • How are you tracking what you spend?
    • Are you saving enough to get you to your goals?
    • Do you need to save more?
  • Do you have a budget for home improvement projects?
    • Are you sticking to your budget?
    • Will you get your money’s worth out of the project?
  • Are you participating in a company retirement plan like a 401(k) or 403(b) plan?
    • Are you taking advantage of catch-up contributions if you are over age 50?
  • Is your debt under control?
    • Do you pay off your credit cards monthly?
    • If you owe money, do you know the interest rate you are paying?
      • Have you prioritized paying off the higher rate balances first?
    • Should you refinance your mortgage?
  • If you have children, do you have a college funding plan in place?

Investing for Your Lifetime

  • What is your mix of stocks and bonds?
    • If the stock market dropped 10% over a month, would you still be comfortable with your mix or would you sell in a panic? How about 35%?
  • Do you have an investment policy statement?
    • Does it need to be updated? Are you still comfortable with your mix of stocks and bonds?
  • Do you know what the term “asset location” means?
    • Are you purposely holding assets in the most tax-efficient vehicle?
  • Do you have enough money in liquid accounts to meet current expenses?
  • What sources of income will you have in retirement?
    • How are these income streams taxed?
    • Have you considered the sequence of withdrawals? What makes sense to tap first? Second?
    • Do you need to adjust the distributions you are taking?
      • Too much: you run the risk of depleting your assets too soon
      • Too little: you could be having more fun!
  • Do you have retirement plans from former employers that should be rolled over to your traditional IRA?
  • Would you benefit from a Roth IRA conversion?
  • Do you have any concentrated positions in any one stock?
    • Do you have a plan in place to decrease that concentration?
    • Do you understand the tax consequences of decreasing your concentrated stock?
  • If you have stock options, do you have a strategy in place to exercise and sell the shares?
    • How does this strategy fit into your overall financial plan?
  • Have you studied your most recent tax return for ideas on how to better manage your taxes this year?
  • Should you pay off your mortgage?
  • What financial goals have you met in the past year?
    • How has accomplishing these goals improved your life?

Leaving a Legacy

  • Do you have an up-to-date estate plan?
  • Are your assets titled appropriately so that your estate plan will flow the way you intend?
  • Do you know who you’ve listed as a beneficiary on your life insurance policy or retirement plan?
  • Do you know what your gross estate is worth?
  • If you are incapacitated, do you have durable powers of attorney that specify an agent to act on your behalf?
    • Does that person know your wishes regarding life support? How about a ventilator?
  • Do you want to be an organ donor? Have you specified that on your driver’s license?
  • Have you put in writing how to care for your pets if you are incapacitated or after you die?
  • Are you interested in leaving an ethical will that tells your family about what you’ve learned in your lifetime or what values you hold most dear?
  • Do you have enough money to be gifting each year?

Remember how we started this article? You don’t know what you don’t know. Now you have a better idea of what to ask to start moving toward your goals.

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Disclosures
The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.