New year financial planning checklist

Organize and streamline your financial life

Simply being able to easily track your finances can make a huge difference. Whether you already have a system for managing your money or want to develop better habits, now's a great time to evaluate your approach and implement new routines.

Start by creating a list of all your monthly bills, subscriptions, and any other recurring expenses. Seeing your cost of living will let you know how much expendable income you have and help you establish a manageable budget.

Next, consider setting up or adjusting recurring savings and payments. Having funds automatically directed into savings or investment accounts makes it more likely you'll follow through with your financial plans, while having bills deducted automatically ensures you never miss a payment. Remember to inspect your account statements regularly and cancel automatic payments for any duplicate subscriptions or services you're no longer using.

Pay off debt

Debt comes in many forms—mortgages, student loans, credit cards, and auto loans to name a few. But one thing remains the same: The interest you pay on your debt can add up quickly, so it's important to plan to pay it off as soon as you can. There are many strategies for paying off debt, but here are 2 common approaches to consider:

• The avalanche method prioritizes paying off your highest-rate debt first while making minimum payments on all your other debts. Once you pay off your highest-rate debt, transfer your payments to your second-highest-rate debt until it's also paid off. Then continue this until you've paid off all your prioritized debts.
• The snowball method involves paying off the lowest balance first while making minimum payments on your remaining debts. After your lowest balance is paid off, allocate your payments to the next lowest balance. Continue this until you've paid off all your balances.

The key is to find what works for you and stick with it.

Boost your financial wellness by tackling debt

Build your emergency savings

It's important to have an emergency fund in place to cover unexpected financial hardships, including a job loss, a medical emergency, home repairs, or car troubles. Putting aside at least 3 to 6 months of living expenses is a good rule of thumb. But of course, the more you can save, the better. If you're struggling to get started, begin with a small amount and build up your savings over time. Remember that as little as $50 a month gives you $600 in annual savings.

Emergency funds: 4 tips to boost your financial health

Review investment portfolios and retirement accounts

It's a good idea to check your existing investment and retirement accounts periodically and perform any routine maintenance that isn't automated to ensure they're still on track with your financial plan. If you're directing your own funds, you may want to rebalance your portfolio, explore tax advantages, adjust your contributions, or update beneficiary information based on a variety of factors including your age, family changes, and market conditions.

If you have an IRA or 401(k) and are 50 or older, you may be eligible to make catch-up contributions, which increases your annual contribution limit. If you're 73 or older,¹ you'll need to take required minimum distributions (RMDs) each year if applicable. You should also verify the accuracy of your beneficiary details on any estate plans and other accounts to confirm they're up to date.

Consider your financial goals

What are your financial goals for this year? Do you want to save for a down payment on a house, your retirement, or a child's education? Once you know your goals, you can create a plan to fund them. It may involve setting a budget, increasing your income, or investing your money. Mapping out your plan is as easy as asking yourself a few key questions.

Turn your goals into an investment plan

Get personalized investment advice

Vanguard's low-cost advice solutions provide personalized financial planning and investment management to help you reach your financial goals. From our all-digital option to having your own dedicated advisor, we create tailored plans, manage diversified portfolios using low-cost funds, and offer as-needed support to adjust strategies as your needs or market conditions change.