I love checklists. Especially when I want to make progress in a particular area but don’t exactly know what steps to take. This is a personal financial checklist that covers many of the steps I have taken over last decade that have helped me move from being a financial mess to having a little bit of an idea of what’s going on.
Some of the listed items are bigger and will take a long time, and some of them are simple tasks that you can accomplish in a day. Some will be relevant to your situation and some will not – that is why it is called “personal” finance – everyone’s situation is unique.
But, if you are just starting out and are trying to get yourself into a better position financially, I would suggest spending the next couple months and checking off as many things on this list as possible. If you do that you will be on your way to financial freedom!
If you would like to print this checklist and use it for yourself, just click here.
This is not a chronological step-by-step process, but like the title suggests it is just a checklist. Some of the items can be done simeultaneously, while others will require another item to be checked off first. Other than the first couple items, they are not listed in any particular order. If you are looking for a step-by-step process, I highly recommend Dave Ramsey’s book The Total Money Makeover.
My Personal Checklist to Financial Freedom
Start giving regularly
Something. Anything. If you don’t have money, give your time. Just get the sowing and reaping process started. The Bible says as long as the earth remains there will always be seedtime and harvest and you can’t reap what you don’t sow. So just like a farmer wouldn’t expect crops without planting seed, we too must start sowing in the area that we want to reap.
Make a lifelong promise to yourself to spend less money than you earn
We could end this checklist right here and it would suffice. Just about everything listed below falls into this category. Spending less than you earn is the key to wealth-building, and is the most important lesson when it comes to personal finance. You can do everything else right, but if you spend more money than you earn you will not be in a good financial position.
This is the simple rule that allows families living on a $40,000/year salary to retire with millions and that causes millionaires to go bankrupt. You have to decide that you will not spend more money than you earn.
Pay off all consumer debts
Proverbs 22:7 says that the borrower is slave to the lender. Having been a slave and a free man in this area, I much prefer being free. A wonderful second benefit is that you have a lot more financial peace and can build wealth faster when you are out of debt. For paying off debts, I recommend the Debt Snowball Method and there are a few other tools and resources to cut your debt.
Negotiate a better rate with credit card companies
While I was working to pay down my debt, I spent some time on the phone negotiating with my credit card companies to get a better interest rate. It isn’t a guarantee, but I consistently would get off the phone with a better interest rate than when I called.
Create a budget
Creating a budget can be as simple or as difficult as you make it. I love having a budget in place – contrary to what I thought before I tried it, it doesn’t feel like we are in handcuffs, but rather that we are more free to spend money in the areas we want to.
There are lots of budgeting software options and other budgeting tools to help you. Having a budget has helped my marriage, saved us thousands of dollars, and given us so much more peace with our money.
Get the employer match on your 401(k)
If your employer has a matching program in your 401(k) or 403(b) (many of them do) you should try to take advantage of that if at all possible. My former employer had a 100% matching program. So if I put in $500, they put in $500. That is a 100% return on my investment. This is the easiest way to boost your retirement dollars.
Start an emergency fund
This was another thing that we did to give us a lot more peace with our finances. It can be expected that unexpected things will happen. Creating an emergency fund is just proof that you are expecting them. We have since used our emergency fund to save us even more money.
Sell your junk
Way too many of us have way too much stuff. A lot of it would never be missed if we got rid of it. I have sold a lot of stuff on Ebay & Amazon and it helped provide some extra cash to pay down my debt.
Start learning what the Bible says about money
The Bible really has a lot to say about our money. I wrote an article called 5 Bible Verses about Money that Every Christian Should Know and if that isn’t enough here are 250 Bible Verses about Money.
Create a balance sheet
A balance sheet is a snapshot of your financial position. I like to update it every six months and it is a fun and helpful way to gauge your progress.
Create a FLOP
Since I handle the finances in our family, I know a little more about what’s going on than Linda does. I created this file, which I call our Financial Life on One Page (FLOP), as something that she could go to if I died prematurely. I combined it with our balance sheet to make it one file that covers all the financial details that she would need if I were gone.
Start giving 10%
Giving 10% of your income to your local church is an important milestone. God was the original giver and we were created by Him to be givers as well. I have witnessed miracles in our life in the area of giving and it also happens to be the only place in the Bible where God says it is okay to test him – see Malachi 3:10.
Organize your bank accounts
I discovered that having more than one checking account allowed us to manage our money much cleaner and with more efficiency. Here is a little on how we organize our bank accounts.
Cut your expenses
If you are really trying to save money or get out of debt, you need to thoroughly examine each of your monthly expenses. I wrote about 15 ways to cut expenses which will get you started, but always be asking yourself, “Is _______ really necessary?” or “Can I get ______ cheaper somewhere?”
Simplify your bill-paying process
I created a simple system for paying my bills each month. It made my life a lot easier and eliminated a lot of stress. Read more: How to Pay Monthly Bills.
Figure out your true hourly wage
This is a fantastic exercise to help you more accurately know what your time is worth and whether or not that job you have is worth it. Try it here: How much are you really getting paid?
Set career goals
Following up on the previous task, is the current job worth it? It is going to help you reach your career goals? If you continue doing what you are doing, where will you be in 5 years – or 20 years? Are you doing what you love? If not, find someone doing what you want to do, take them out to lunch, and ask them how they did it.
Create a will
Save your loved ones a headache and just do it. You can do it at LegalZoom.com in less than 30 minutes and be done with it.
Evaluate your car situation
I am convinced that the one of the biggest things that keeps the middle class Americans in the middle class is their insistence on spending way too much of their income on cars. I used to believe that I would always have a car payment. I was wrong and now I intend to never have a car payment because I will save up cash for whatever car I buy. Watch this video for inspiration. For more read How Cars Affect Your Financial Freedom.
Start saving for your children’s college education
If you have kids you might want to start saving for their college education. Personally, I wouldn’t do this until I had my debt paid off and had a head start on saving for retirement. Your kids can take a loan out for college, but the only loan you can get for retirement is on a credit card and that seems a bit foolish to me – don’t you think? Some argue that the 529 is the best college saving plan, but the Education Savings Account is a good option as well.
Get life insurance
I believe in buying term insurance over whole life. There are some cases where there could be an argument for choosing whole life, but generally term seems to be a better purchase for most people. I recently signed up for my first life insurance policy. I used Zander to get a term life insurance quote and was happy with the process. You can read more in my Zander Term Life Insurance Review.
Pay off your house early
As part of getting out of debt, I want to live without a mortgage as well. Here are some ways to pay off your house early. Just imagine your electric bill being the most expensive bill each month. I can’t wait!
Give more than 10%
Any other items you have on your personal financial checklist that should be added? Leave a comment!