The Annual Financial Checklist

A financial checklist helps you stay on top of your finances, fix money leaks, and uncover new opportunities for growth.

In this article, we’ll walk through a 10-step financial checklist that covers everything from budgeting to future planning—plus actionable steps you can take to get started today.

Who Needs a Financial Checklist? (Hint: Everyone)

A financial checklist or annual review benefits anyone who earns or spends money—regardless of income or expertise.

Just like your physical health, your financial health needs regular checkups too. Without them, small money leaks can snowball into large financial setbacks. An annual review helps you catch billing errors, uncover savings opportunities, and track forgotten accounts so that you can stay in control of your wealth.

Reviewing your finances also keeps you accountable, turning vague intentions into concrete actions that move you closer to your Rich Life.

Step 1: Evaluate Your Conscious Spending Plan

Start your financial checklist by analyzing and evaluating your current spending behaviors.

Review your actual spending

Your Conscious Spending Plan (CSP) is the foundation of financial success. Here’s a simple breakdown of typical spending targets:

• 50–60% for fixed costs: rent, utilities, bills, insurance, subscriptions, groceries, and other essentials
• 10% for investments: stocks, retirement funds, or other investments
• 5–10% for savings: emergency funds, retirement funds, or other financial goal contributions
• 20–35% for guilt-free spending: dining out, shopping, travel, hobbies, or anything that you enjoy

These percentages aren’t rigid rules; they’re flexible guidelines you can adjust based on your situation. For example, you might allocate more to fixed costs in a high-cost city or shift funds toward debt repayment if that’s a higher priority for you.

When reviewing your finances, start by comparing your actual spending to these targets. This will give you insight into your financial habits, such as identifying areas where you tend to overspend or other areas that might be underfunded.

Analyze your spending patterns and habits

Beyond the numbers, take a closer look at your spending to understand your priorities:

• Are you consistently allocating money toward what truly matters to you?
• Are you cutting back on spending that doesn’t help you find your Rich Life?

This is also the perfect time to check for any spending leaks. Review your current subscriptions and memberships—are you fully utilizing them, or are they forgotten expenses? Many people waste hundreds of dollars each month on services they signed up for but then forgot about.

Evaluate in detail your guilt-free spending: do you notice habitual spending or frequent impulse purchases that don’t align with your values and goals? These small expenses may seem harmless, but they add up over time.

If you want to take control of your finances, check out my guide on how to build a bulletproof budget.

Step 2: Optimize Your Fixed Costs

Instead of treating fixed costs as non-negotiables, consider ways to work smarter and reduce your overhead:

Renegotiate recurring bills and services

Start by listing all your recurring bills and comparing your current plans to competitors’ offerings. You don’t even have to switch providers; just having this information gives you leverage for negotiating better rates. Many companies would rather match or beat a competitor’s price than lose your business.

Call your service providers—cable, internet, phone—and ask for lower rates or plans that better fit your needs. A simple request could save you hundreds of dollars annually, and if they say no, you lose nothing. Just be mindful not to get upsold on unnecessary features disguised as a “better package deal.” You might even reassess whether you truly need your current features if a lower-tier plan is sufficient for your lifestyle.

I share a more detailed breakdown of how you can manage and calculate your expenses in this guide.

Assess housing costs 

Housing is often your largest fixed expense, making it a prime target for optimization. Making smart housing decisions can have a major impact on your overall financial health.

If you own a home, consider whether refinancing at current rates could lead to meaningful savings.

For renters, evaluate if your current living situation aligns with your financial goals:

• Would relocating to a slightly different area reduce costs while maintaining your lifestyle?
• Should you downsize to save more, or even upgrade if it supports your Rich Life?
• Are you financially better off renting or buying?

You can also explore creative strategies like house hacking—getting a roommate to share rent, renting out a spare room, or leveraging other ways to offset housing costs and improve your overall financial position.

Review insurance policies and coverage

Insurance is essential for financial protection, but optimizing your policies ensures that your current plans align with your coverage needs and financial goals.

Like other recurring expenses, compare quotes from multiple providers to secure competitive rates. As long as you already have enough emergency savings, consider increasing your insurance deductibles to get significantly lower premiums.

Bundling policies can also save money but always compare bundled discounts against the cost of separate policies to make sure you’re getting the best value for what you truly need.

Identify unnecessary expenses to eliminate

A Rich Life means spending extravagantly on things you love while cutting costs ruthlessly on things you don’t care about.

Be relentless about eliminating expenses that don’t add value to your life. Focus on your Money Dials—the areas that matter most to you, such as travel, health, or convenience—and cut what doesn’t align. This intentional approach to spending creates more satisfaction than trying to have everything.

Scrutinize every recurring expense by asking yourself: Does this bring me joy or value equivalent to its cost?

Look for overlapping services that can be consolidated, like multiple streaming subscriptions or redundant software tools. Many “necessary” expenses are just habits or conveniences that can easily be replaced with more affordable alternatives.

Let’s look at a real-life example: Juan and Amber struggled with their retirement plans due to poor money management, which was driven by deep-rooted, unhealthy money beliefs. During our conversation, it became clear that they’d misunderstood what it truly means to live a Rich Life; instead, they had been overspending beyond their means on things that ultimately didn’t contribute to the life they envisioned for themselves and their family:

[00:49:07] Juan: But at one point I had almost 50,000 in savings.

[00:49:16] Ramit: What happened to it? Don’t say the motorcycle. I [Bleep] knew it. Tell me.

[00:49:24] Juan: We have five motorcycles.

[00:49:26] Ramit: Five [Bleep] motorcycles? I don’t even have five books I wrote. Why do you have five motorcycles?

[00:49:32] Juan: This is your fault.

[00:49:33] Ramit: Oh, tell me.

[00:49:35] Juan: This is my Rich Life.

[00:49:37] Ramit: Don’t [Bleep] me on this. Goddammit. How many people take my advice,  Rich Life? Then they twirl around three times. They go, “Rich Life, Rich Life, Rich Life.” And then they just buy whatever the [Bleep] they want. That’s not how the concept works. You know this.

To avoid making these same mistakes, it’s crucial to make intentional financial choices and cut out expenses that don’t align with your priorities or values. Otherwise, you risk falling into a cycle of debt that keeps you from ever truly building your own fulfilling Rich Life.

Step 3: Maximize Your Investments

Another key step on your financial checklist is maximizing your investments to build long-term wealth.

Confirm 401(k) contribution levels

If your employer offers a 401(k) match, make sure you’re contributing enough to get the full match—it’s essentially free money! For example, if your employer matches 5% but you’re only contributing 3%, you’re leaving money on the table.

As your finances improve, aim to increase your 401(k) contributions beyond the minimum match. Even a 1% annual increase can significantly boost your retirement savings over time through compound growth.

Finally, don’t overlook the important step of verifying whether your contributions are actually invested and not just sitting in a cash account. Many plans require you to manually select investments after enrolling.

Verify investment allocations in retirement accounts

Regularly review your 401(k) and other retirement accounts to ensure they align with your age, goals, and risk tolerance. As you assess your portfolio, prioritize low-cost index funds or target-date funds that offer broad market exposure with minimal fees; high-expense ratios can significantly reduce your returns over time.

Make sure your asset allocation (the mix of stocks, bonds, and other investments) is still helping you reach your financial goals. As you get closer to retirement, consider gradually shifting toward a more conservative allocation to protect your savings. Similarly, if your financial situation changes, such as a salary increase or a major life event, reassess your portfolio to check that it still supports your long-term objectives.

Review Roth IRA contributions and investments

If you’re eligible, make sure you’re maximizing your annual Roth IRA contributions, as this account allows for tax-free withdrawals in retirement.

If your income exceeds the direct contribution limits, consider the “backdoor Roth IRA” strategy, which enables higher earners to access these benefits. Essentially, you’ll make a non-deductible contribution to a traditional IRA and then convert it to a Roth IRA. Since this strategy requires careful adherence to IRS rules and proper tax reporting, it might be helpful to consult a tax professional before implementing this approach.

Additionally, review the investments in your Roth IRA alongside your other retirement accounts to optimize tax efficiency across your entire portfolio.

Rebalance portfolio when necessary

Market fluctuations can shift your asset allocation away from your target mix over time. For example, a strong stock market may increase your equity exposure beyond your intended risk level.

To maintain balance, periodically rebalance your portfolio by selling assets that have grown beyond their target allocation and purchasing those that have fallen below.

Consider setting quarterly reminders to review your portfolio. However, only rebalance your portfolio when allocations drift significantly (typically more than 5%) in order to minimize unnecessary transaction costs.

Step 4: Look at Your Savings Strategy

In addition to investments, your financial overview should include a deep dive into your savings strategy.

Reassess short- and medium-term goals

Start by listing your specific savings goals for the next five years—whether it’s a down payment for a home, a dream vacation, or a car purchase—and estimate how much you’ll need to reach those goals.

To stay accountable, consider setting up separate savings accounts for each major goal. This helps you avoid the temptation to dip into one fund in favor of another, and it makes tracking your progress more tangible. You can also explore short-term investment options like high-yield savings accounts or certificates of deposit (CDs) to maximize the interest you earn while saving.

Adjust your monthly contributions as timelines or priorities shift. If a goal becomes more urgent, allocate more funds to it, even if it means temporarily reducing savings for lower-priority goals.

For a more in-depth guide, here’s how you can better manage your monthly savings.

Review your emergency fund

A solid emergency fund should cover three to six months of essential expenses (more if you have variable income or financial dependents). Keep this money in a high-yield savings account so that you can quickly and easily access it when necessary.

If you haven’t built an emergency fund yet, make that a priority before focusing on other financial goals. Life changes like marriage, children, or career shifts may also require increasing your target savings amount to build a stronger financial safety net.

To maximize growth on this money, store your emergency fund in an account with competitive interest rates. Traditional banks typically offer minimal returns, while online banks can provide rates 10–20 times higher.

If you’re unsure where to start, check out my article on why everyone needs an emergency fund and how to build one.

Step 5: Manage Your Debt Effectively

By prioritizing a solid debt management strategy in your financial checklist, you can make progress on achieving financial freedom, even while you’re still working to pay off your debts.

Review debt payoff progress and strategy

Assess your current debt balances and compare them to last year’s figures to gauge your progress. If the balances have barely changed or are decreasing too slowly, it may be time to refine your strategy.

Reevaluate whether your chosen payoff method still suits your financial situation and mindset:

• Debt Avalanche Method: Focus on paying off high-interest debts first to minimize total interest paid.
• Debt Snowball Method: Tackle the smallest debts first to build motivation and momentum.

Choose the approach that keeps you committed and accelerates your journey to debt freedom. To find out how to best manage your debts, check out these guides:

• Debt Avalanche Method vs Debt Snowball Method
• How to Get out of Debt Fast

Renegotiate interest rates on existing debt

Lowering your interest rates can save you hundreds or even thousands annually, and it starts with a simple ask.

If you’ve maintained a good payment history, call your credit card company and simply request a lower rate. You can use a straightforward script like this:

“I’ve been a loyal customer, but I’ve received offers for lower interest rates elsewhere. Can you match them?”

A quick call could lead to significant savings. You can also consider a balance transfer to a lower-rate card if you’re carrying high-interest credit card debt. Just be sure to factor in transfer fees and track the promotional period’s end date to avoid spending more in the long run.

For bigger debts like mortgages, auto loans, or student loans, refinancing may be worth considering if current rates are lower than when you first borrowed. A lower rate could mean reduced monthly payments and long-term interest savings, freeing up more money for your other financial goals.

Step 6: Strengthen Your Credit Profile

By boosting your credit profile, you can unlock better financial opportunities across the board:

Check credit reports from all three bureaus

Regularly reviewing your credit reports is essential to maintaining an accurate financial record and protecting yourself from fraud.

To check your credit reports from the three major bureaus (Equifax, Experian, and TransUnion), request your free reports from AnnualCreditReport.com. Carefully check for discrepancies in account status, payment history, and balances. If you spot any inaccuracies, dispute them directly with the reporting bureau—your rights under the Fair Credit Reporting Act require them to investigate and correct any errors.

Review and understand your credit score

Beyond checking your credit reports, it’s important to track your credit score and compare it to previous years to spot any major changes. Many banks and credit card issuers now offer free credit score access, making it easier than ever to monitor your progress.

Understanding what influences your score can help you optimize it. The five key factors in the calculation of credit scores are:

• Payment history (35%): Pay on time, every time.
• Amounts owed (30%): Keep credit utilization below 30%.
• Length of credit history (15%): Maintain older accounts for a stronger profile.
• New credit (10%): Avoid opening too many accounts at once.
• Credit mix (10%): Maintain a healthy mix of credit types to boost your score.

Don’t underestimate the power of small, strategic changes—making on-time payments, lowering your debt, and managing credit wisely can have a lasting impact on your credit score.

Optimize credit card usage and benefits

With so many credit card options available, you’ll want to review your spending habits to ensure you’re using the cards that maximize rewards in your top spending categories.

Assess whether your current mix of credit cards still aligns with your lifestyle, especially if your spending patterns have shifted. You might be overlooking valuable perks like travel insurance, purchase protection, or extended warranties that could save you money on everyday expenses.

However, be mindful of the temptation to overspend in the name of chasing rewards. The goal is to use credit cards strategically, not accumulate unnecessary debt. If you have outstanding balances, prioritize paying them off before focusing on maximizing rewards.

Let’s take a look at Frank and Jill—their poor debt management trapped them in a vicious cycle of credit card debt. Combined with toxic money habits rooted in emotions and resentment, these financial struggles have put immense strain on their marriage.

[00:36:30] Ramit: We start to concoct stories. Well, we need this because of that. Let’s buy this. It’ll make us feel better. We then tell ourselves another layer of the story, which is we’re not buying anything extravagant. It’s all necessary. We’re investing in our time and ourselves. And you end up where?

[00:36:46] Jill: Yeah, in debt.

[00:36:54] Ramit: Here we are. Now, what happens if you keep going?

[00:36:57] Jill: The biggest fear is we’re going to be bankrupt and all of the fears that we have been fueling are going to be reality.

[00:37:05] Ramit: You’re going to be bankrupt. Do you know when?

[00:37:07] Frank: All the interest rates of the cards go on full strong next year.

[00:37:11] Jill: Yeah, we’re already in red.

Credit cards can be powerful tools for maximizing rewards, but when they’re managed unwisely, they can also easily lead to overspending and major debt accumulation. The financial and emotional stress that results from this debt can far outweigh any perks gained from the cards in the first place.

Step 7: Negotiate and Eliminate Fees

Review your monthly and/or annual fees across all relevant platforms and utilities:

Banking and investment account fees

Many banking and investment fees often go unnoticed. Make sure to take time to identify, negotiate, or avoid them altogether.

When it comes to banking, review all your bank statements for hidden fees like monthly maintenance fees, minimum balance penalties, or excessive transaction costs. Many banks will waive these fees if you ask.

For investments, compare expense ratios and management fees against industry benchmarks, as even small differences can significantly impact long-term returns.

Finally, assess whether premium account features are worth the cost—banks often charge for extras like paper statements or cashier’s checks, which not everyone needs.

Credit card annual fee assessment

Look at your credit cards’ annual fees in order to decide if each one is worth keeping. You might find that it makes more sense to renegotiate for a waiver or retention offer, or downgrade to a no-fee version altogether.

Start by creating a value analysis for each card with an annual fee by listing all the benefits you’ve actually used in the past year and assigning a dollar value to each. If the perks don’t outweigh the cost (the annual fee), it might be time to consider canceling that card.

If you’re on the fence about canceling, call your card issuer to ask about retention offers or fee waivers; many companies provide incentives to keep loyal customers. If maintaining your credit history length is a concern, consider downgrading to a no-fee version instead of canceling outright.

Insurance premiums

Lower your insurance costs by requesting premium reductions based on positive life changes, such as an improved credit score, home security upgrades, or the completion of a defensive driving course.

If you have multiple policies, bundling them with the same provider can lead to discounts. However,  always compare the bundled price with separate policies from different insurers to ensure you’re getting the best deal.

Step 8: Plan Your Income Growth

Now that you have a clearer understanding of your current financial standing, your annual financial review should focus on strategies for increasing your income and building long-term wealth.

Set salary negotiation targets

If you’ve been in your current role for a while, consider planning a salary negotiation in the near future by following these steps:

• Research industry benchmarks: Use platforms like Glassdoor or PayScale to set realistic salary expectations.
• Document your achievements: Focus on measurable contributions that showcase your impact.
• Plan your negotiation strategy: Consider timing (performance reviews work best), decide on  your target ask amount, and prepare responses to potential objections.

If your current employer isn’t open to a salary renegotiation, consider exploring higher-paying opportunities elsewhere that better match your skills and experience.

For a more detailed guide, check out my article on how to negotiate your salary (with scripts you can follow).

Explore side hustle opportunities

If you’re serious about increasing your income, a side hustle can be a powerful way to achieve your financial goals and work toward your Rich Life.

Start by identifying marketable skills or assets you already have that can generate additional income. When choosing a side hustle, assess its feasibility based on income potential, scalability, startup costs, time investment, and alignment with your interests and schedule.

One way to reduce financial risk is to start small with a test project. This approach allows you to gauge market demand and refine your offering before committing significant time or money.

I dive deeper into side hustles—including ideas, strategies, and key considerations—in these articles:

• 50+ Best Side Hustle Ideas to Make Money Fast (+ #1 Secret)
• 20 Ways to Make Money on the Side

Develop skills that increase earning potential

One of the most effective ways to boost your income is by investing in professional and personal development.

If you work in a specialized field, identify high-value skills that command premium compensation or give you a competitive edge. Then, create a learning plan to acquire or refine these skills. Within your organization, take on responsibilities that give you valuable experience and position you for future career growth. These opportunities can serve as stepping stones to higher earning potential.

Finally, evaluate whether formal education, certifications, or specialized training would provide a strong return on investment in terms of career advancement and salary growth.

If you’re ready to invest in your future with high-value skills, check out these IWT Programs. I cover a wide range of topics, all designed to help you increase your earning potential and build your Rich Life.

Step 9: Protect Your Financial Future and Legacy

Managing your finances isn’t just about the present; it’s also about future-proofing your wealth and legacy.

Create or update your will and/or estate plan

If you don’t have a will yet, make that your first priority. Ensure your will accurately reflects your current wishes regarding asset distribution, guardianship, and other key decisions.

Consider adding essential estate planning documents like a living will, healthcare proxy, and durable power of attorney to safeguard your interests in various circumstances.

It’s important to review and update your estate plan regularly, especially after major life events like marriage, divorce, births, or financial changes.

Check account beneficiary designations

Regularly review and update beneficiary designations on your retirement accounts, life insurance policies, and investment accounts; these designations typically override any will instructions and allow for the direct transfer of assets to named individuals.

Where possible, add contingent beneficiaries as a backup plan in case your primary beneficiary is unable to receive the assets for any reason.

If you’re looking to build a strong financial legacy, check out this post where I share 7 key habits for long-term wealth.

Step 10: Set Goals for the Coming Year

To wrap up your financial overview, it’s helpful to set clear, actionable financial goals for the year to keep you accountable:

Identify three major financial priorities

When setting financial goals, focus on a few high-impact priorities instead of an overwhelming list. Choosing three key goals allows for concentrated effort and sustainable progress.

Balance your priorities by addressing different aspects of your finances. For example, setting one debt-reduction goal, one saving or investing goal, and one income-growth goal will result in a well-rounded strategy.

To stay motivated, frame your goals positively in terms of what you’ll gain rather than what you’ll sacrifice. For example, instead of saying, “Spend less on dining out,” reframe it as, “Build a $10,000 emergency fund.” This helps you visualize what you’re working toward, which makes the progress feel more rewarding.

Set goals that are specific and measurable, with clear deadlines. Swap vague intentions like “Save more” for “Save $500 per month to build a $6,000 emergency fund by December” to give yourself a clear, trackable path forward.

Schedule quarterly mini-reviews

Instead of relying solely on an annual financial check-in, schedule brief quarterly reviews to assess progress, address challenges, and adjust your strategy as needed.

These reviews keep you on track, help you identify obstacles early, and give you a chance to celebrate wins—keeping you motivated throughout your financial journey.

Regular reviews also enhance your financial self-awareness. By tracking patterns in your spending, saving, and investing habits, you’ll gain valuable insights that allow you to refine your approach and make smarter financial decisions over time.

Your Financial Checklist Action Plan

Now that you have a clear understanding of what a financial review comprises, here’s how you can put it into action:

How to implement this checklist effectively

Break this checklist into manageable chunks to avoid feeling overwhelmed. You don’t have to complete everything in a day. Consider tackling one major section per week, completing the whole list in a month or two.

Start with quick wins that deliver immediate results, such as negotiating bills or canceling unused subscriptions. These small victories build momentum before you move on to more complex financial tasks.

Schedule a dedicated “money day” in your calendar to focus exclusively on financial maintenance. Eliminating distractions and setting aside intentional time can make the process smoother and more effective.

Finally, shift your mindset and view these sessions as an investment in your future, not a tedious chore. That way, you’ll be excited to review your finances knowing it leads to long-term financial success.

Tools and apps to streamline the process

Gone are the days of managing your finances with pen and paper or manually updating a blank spreadsheet. Today, financial management is simpler than ever if you have the right tools.

Leverage financial aggregation apps like Empower or YNAB to automatically track your spending, categorize expenses, and monitor investment performance—all in one place. If you prefer a structured approach, use readily available budgeting templates to simplify the process.

Set calendar reminders or use specialized finance apps to schedule regular check-ins and make sure nothing slips through the cracks. Automating bill payments, savings contributions, and investment reviews can also help keep your finances on track with minimal effort.

When to seek professional guidance

For most people, managing finances independently is entirely possible with dedication and the right tools. However, there are certain situations where you might need professional guidance from a financial advisor or attorney, such as navigating complex tax scenarios, establishing a plan for your estate, or developing investment strategies for significant assets.

If you’re unsure whether hiring a financial advisor is the right move for you, check out this guide to help you make an informed decision.

Making this an annual tradition

Just like any other annual planning or review, schedule your financial check-in at a consistent time each year—ideally during a naturally reflective period, such as December or January.

Rather than viewing this process as stressful or intimidating, treat it like a personal financial journal, tracking your progress and understanding how your priorities have evolved. It might also be helpful to involve your partner or family members in relevant parts of the review to align your financial goals and pass down valuable money management skills.

For deeper insights on taking control of your finances and creating a fulfilling Rich Life, check out my New York Times bestselling books, I Will Teach You To Be Rich and Money For Couples.