Dr. Atul Gawande wrote a fabulous book a number of years back about the benefit of building checklists and how they can eliminate mistakes in all sorts of situations from the operating theatre to flying a plane. The thrust of the philosophy is that breaking a process down into its individual parts helps to both make the process more efficient and to lower the stress level by taking us out of our heads and helping us to focus on putting one foot (step) in front of the next. With so many baby boomers staring at retirement, the markets not being what they used to be, and the overall social media/24-7 news cycle impacting our emotional health, how might this step-by-step process help us with our own personal finances?

Many of us face a number of forces all pulling at our financial situation all at once – how’s my cash reserve? Do I have money for summer camps? How to handle any debt I might be carrying with a variable interest rate? Am I saving enough for retirement? Add your concern here…. If you look at all these issues, you can just picture a whole stack of bricks teetering on each of our shoulders. Regardless of your socio-economic level, everyone struggles with carrying these bricks. Someone who is a 1%’er of the 1% still has worries; they just have a few more zeros (and, somewhat ironically, their paranoia is actually far greater than the people earning less than $75k/year).

This is where building a financial checklist can help ease some of that emotional pressure. Here’s how it’s done:

• Grab a pad of paper and take a quiet moment to write down all of your financial concerns. Yes, it should be a pad of paper and the preferred writing utensil is a pencil – there’s a whole brain function reason to do it this way which would make this missive way too long so I’m just going to say – trust me.
• Once you have all your concerns, reorder them based on their importance to your personal financial health. For example – if you don’t have a 3 month cash reserve that covers your basic living expenses then that goes to the top of the list. I don’t care if you aren’t saving enough for retirement, if you’ve got debt out the wazoo, or if your kid needs new clothes. Keeping the roof over your head and the lights on needs to be your focus.
• From there, you pick the next most important thing to tackle. What might this be? If you are carrying credit card debt, then there’s your answer. If you don’t have any debt – congratulations and good for you. That gives you more cash flow to tackle the next thing on your list.
• Next up might be retirement savings. We’ve talked in the past about a baseline percentage of your income that you should be setting aside for retirement so now’s the time to face that squarely head on.

Right there you have a very simple checklist but how might we use it? The key is that we focus on one thing, and just one thing, until that goal is done. If you are building that 3 month cash reserve then we don’t focus on the credit card bills (other than to pay the minimums each month) or what we are putting into retirement (if anything). Our focus is on building a step by step plan to complete that cash reserve goal. That might include a checklist that looks like this: Open a savings account. Redirect $25/pay from our paycheck into that savings account. Hold our noses and build a budget. Pick one category per month to streamline (pick food first, it’s the easiest). Increase our paycheck deduction to $XX/pay to redirect the dollars we’re saving by analyzing our budget. Pick a budget category and think out of the box on how to reduce that expense. Repeat. I often encourage clients to put a timeline to the goal. Hard core budgeters can often build a basic cash reserve in a relatively short period of time. If you’re a year into the process and haven’t tackled the goal, perhaps we should revisit your dedication.

What we’re looking for here is a process – something to help us avoid being distracted by that next “gotta have,” perceived emergency (particularly from a child – I was recently counseled not to write a missive on the Bank of Mom & Dad so I won’t, for now), or the ever-present global marketing strategy that was built for the sole purpose of separating us from our dollars. What this also does is help shape our behavior around money. When you are tackling each of these steps, you have a guideline on what to do with your money. If a group of friends is heading out to dinner or a night of entertainment, you have a reason to say “sorry, can’t do that right now.” I’ll often tell people to use their financial advisor as the bad guy – it can be far easier to say “my financial advisor wants me to focus on my financial goals right now” than to say “that’s not in my budget” (which may be the truth but is awfully hard to say in a society that doesn’t talk about money).

Building and following a checklist can get us to our goals far more efficiently than the scatter-shot, all in your head, I’m going to do that when I have time philosophy that often happens when we aren’t really paying attention. Imagine how gratifying it will be to take a big ‘ole Sharpie and cross a step off your master checklist. Not only will you have taken a step towards financial stability but you’ll also get a little shot of dopamine to reinforce the pleasure of accomplishing a financial goal.