Personal Finance Checklist

To Get You On Track


The Fundamentals

unchecked_checkbox Establish an emergency fund

First on your personal finance checklist should be the all important emergency fund.  Life is full of unexpected expenses and you may need some cash quickly...  just in case.  For most people $5,000 is enough, but you will need more if you have elderly parents overseas, young kids, a fluctuating wage, or job insecurity.

unchecked_checkbox  Establish your financial goals

A personal finance checklist is all about what actions to take, but your actions need to be working towards something.  Unless you know where you want to get to, you will never be clear on what direction to go.  Goals might include travel, spending time with your family, kids education, a house upgrade, retirement and much much more. 

unchecked_checkbox  Learn the difference between shares, property, bonds and term deposits

What is market risk?  What is longevity risk?  Why do these assets grow in value?  What is considered a "normal" investment return for each asset class?  If you do not know the answer to these questions, you will need to do some reading, talk to an adviser, or come to a webinar.

unchecked_checkbox  If you are young, consider investing in your education

This might seem out of place of a personal finance checklist.  Maybe it is, but research suggests it has one of the best rates of return going around.  Sometimes it is not all about cutting expenses but about improving your income.

unchecked_checkbox  Maximise your tax return

I could make an entire checklist on what you could be doing to improve your tax (maybe I will in the future - keep an eye on the education centre).  The key message for the personal finance checklist is to not leave money on the table, and claim all your tax deductible expenses. consider salary sacrifice/packaging and strategies to save tax.

unchecked_checkbox  Pay your credit card in full on time

People often like to take advantage of the 30 days interest free period, but it often only takes one missed payment to cost you a significant amount of money in interest.  This is what the banks are banking on.  If you are not supremely organised, perhaps ignore the bank's push to get you to live off a credit card.

Treat Yourself Like a Business

unchecked_checkbox Review your expenses

A successful business generally has a bookkeeper, an accountant and the management team reviewing expenditure constantly.  A successful household should try to emulate this.   Maybe you will find some expenses that could be reduced. 

unchecked_checkbox  Create a savings plan or budget

No worthwhile personal finance checklist would be complete without a savings plan or budget.  It is arguably the most important thing an individual can do.  This however does not need to be depressing.  Link it to your goals and make it motivating.  Learn how to create a motivating budget here.

unchecked_checkbox  Start monitoring your progress towards your goals

You need to know how you are traveling.  Are you on track or falling behind?  Unfortunately you might not be able to tick this one off your personal finance checklist, as you should be doing it every month.  If that seems too hard, then consider working with a financial planner. 

Get the right structure

unchecked_checkbox Create a structure that gives you control of your expenditure

The difference between saving money and not saving money can often come down to your structure.  Most people are in the habit of spending everything in their account.  Make sure you don't have more than you want to spend in your spending account, and avoid living on the credit card (notice maximising points or using interest free periods will not make an appearance in the personal finance checklist - the banks are not offering these things as a charity).

unchecked_checkbox  Consider consolidating your private debt onto a low interest rate product

Some credit cards have an interest rate at 18%, while your home loan might only be 4%.  This can be a huge difference in cost every year.  I know you don't want to make your home loan bigger, but if you save some money on interest, you will be able to pay all your debt off quicker (just cut up the credit card once you have cleared it).

unchecked_checkbox  Consider using an offset account or line of credit to pay less interest

Rather than having your emergency fund sitting in a cash account earning almost no interest (and getting taxed on what it does earn), perhaps it might be better to have that in an offset or line of credit (where you can still access it quickly for an emergency).  This allows you to pay less interest on your home loan. 

Protect against risk

unchecked_checkbox Learn how to control your emotions when it comes to investing and spending

I am sorry to tell you that you are the biggest risk in this personal finance checklist.  One thing that you need to understand is that you are like every other human and you often make decisions based on emotion (and then rationalise them after).  Getting greedy leads to buying fads, trend and bubbles.  Fear can make you panic when your investments show volatility.  Emotions can also lead to poor spending decisions.  Self awareness is key.

unchecked_checkbox  Take out an appropriate level of personal insurance

I am talking about life, Total and Permanent Disability, Trauma and Income Protection.  If you can not work because of an accident or illness, how are you and your family going to pay the bills, clear debt and have a decent lifestyle?  I know insurance costs money, but finding a balance is important, as you probably can't afford not to have insurance.   

unchecked_checkbox  Make sure you have an up to date Will and Power of Attorney

Did you know that your wife/husband might not get everything by default if you die?  Also, what happens if you are in a coma?  Who can make financial decisions for you?  A good estate plans brings certainty to this situation. 

Get the right help

unchecked_checkbox Find an adviser you can trust

Most people don't think they need help.  Most people retire on the age pension with very little money.  Don't be most people.  Finding the right help can be difficult, and you might speak to a few advisers before you find one you can trust.  We would love if you would consider GPA Financial Planning

unchecked_checkbox  Subscribe to our education centre

This personal finance checklist should be the start of your journey, not the end. Keep up the education and subscribe to our education centre.

unchecked_checkbox  Stop procrastinating and take action

Most of all, a checklist is designed to create action.  It is time to start ticking some of these things off your list.