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5 Steps to Financial Planning: A "Quick Start" To Do List

Congratulations on taking the first step toward living your best financial life! This is an incredibly exciting decision you’ve made - and I hope this “quick start” to do list helps you get the ball rolling.


Step One: Know Your Net Worth

  • Create a list of all your assets - including your retirement accounts, cash savings, etc.
  • Create a list of all your debts - including a mortgage, student loans, and credit card debt.
  • Deduct your total debt from your total assets. This is your net worth!


Step Two: Evaluate Spending

  • Write out a list of all your monthly expenses - both things you need (like rent or mortgage payments) and things you want (like a weekly date night with a significant other).
  • Write out your total income - including income from a full-time job, any side hustles, and regularly anticipated gift money.
  • Deduct your total spending from your total income - how are you doing?


Step Three: Knock Out Debt

  • Now that you’ve determined your monthly expenses and your total net worth, you can put together a plan to start knocking out debt. First, make a list of your existing debt.
  • Organize your debt in order from highest interest to lowest interest.
  • Determine how much you pay each month toward your debt.
  • Create a strategy to eliminate your debt, starting with the loan or bill that has the highest interest. To do this you can look at your list of expenditures and decide where to make cuts that will help to free up cash flow.
  • RULE OF THUMB: Your debt repayment should consist of approximately 30% of your total income.


Step Four: Create a Savings Plan

  • Your next step to financial freedom is to create a savings plan. First, write down what you currently have in savings.
  • Your first savings goal should be to have a “safety net” in cash savings that’s kept for emergencies only. Many people recommend 6-12 months of expenses.
  • Your next savings goal should be to begin contributing to a 401(k) or retirement plan. RULE OF THUMB: Many advice you save 15-20% of your before-tax salary toward retirement.


Step Five: Set Goals

  • The first goal you should have is to constantly increase your net worth while decreasing your total amount of debt.
  • Don’t be afraid to think big! You may be considering purchasing a home or a new vehicle, or maybe you want to go on a three month European vacation - these are savings goals that can come after your retirement plan contribution and safety net savings.

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