The 2026 Financial Planning Challenge

0:04Merry New Year, Fools! Welcome to the first installment of our 2026 Financial Planning Challenge on this Saturday personal finance edition of Motley Fool Money.

0:19I'm Robert Brokamp, and you know your financial well-being depends on more than the value of your investments on any given day. There's also the money you owe, the taxes you pay, the benefits you receive, the place you live, and the preparations you've made for the unexpected and the inevitable. Getting it all right takes a lot of time, knowledge, old-fashioned hard work. That's why together we will make 2026 the year of fiscal fitness. The first Saturday episode of each month, we will focus on a key component of a financial plan, including spending, investing, insurance, retirement planning, estate planning, and taxes.

0:54If you follow along with us throughout 2026, you will end this year in the best shape possible, perhaps in the best shape you've ever been. For each of these monthly episodes, I'll be joined by a Foolish colleague to discuss what you should do and how to do it. This month, I am joined by certified financial planner and chartered financial analyst, Amanda Kish. Amanda, welcome to Motley Fool Money. Thank you so much. I'm glad to be here. We're very happy to have you. This first month, we are calling the Financial Truth Serum. Here's how I think about it. If you're a long-term investor in individual stocks, would you buy shares in a company that didn't issue financial statements?

1:30Of course you wouldn't. How would you know how much money the company makes, how much it spends, whether it's profitable, and ultimately how much it's worth. Well, right now you're investing in an entity that's more important than any stock, you and your family and your family's finances. Together, your income, expenses, debt, and savings all add up to the investment that will have the biggest impact on your future financial successes. So it's important to create your own financial statements to see where you are and where all your money is going. So today, Amanda and I are going to cover five steps to starting 2026 off right in documenting your finances, starting with number one, choose a when and how.

2:07Thank you, bro. And this first step of choosing a when and how is very important before we actually dive into doing any of the financial work. So as you know, financial planning isn't just a one and done activity. It requires dedicated time. And if you don't actually put it on your calendar, it's much less likely to actually happen. We're all busy nowadays. So this first step, we would encourage people to actually establish a specific day and time when you're going to sit down and do the work of tracking your financial life. So pick a regular time slot that works for your life. For some people, that might be a Sunday evening with a cup of tea before the work week starts.

2:52For other folks, it might be a quiet Saturday morning or even a work day lunch hour. So maybe it's the 15th of every month. One other approach is to schedule that time biweekly around paydays when you're probably already paying bills, dealing with aspects of your financial life. So the key here is consistency and treating it like any other important appointment. And if you're thinking, you know, is this really something that I need to schedule? I'd say the answer is yes, because without that type of structure, financial tasks become these things that we can push off. sometimes indefinitely. I'll look at those accounts later.

3:28I'll create that budget later. But if you have the standing appointment, it becomes much more ingrained, much more of a habit. So you're not constantly making decisions about when to deal with money stuff. It's just built into your routine. And having that dedicated time means you can actually focus without feeling rushed or distracted. Yeah, I've tried this in various ways over my life, and I've had to change it depending on what was going on. So it used to be Sundays at seven o 'clock. And then once my kids got older, Sunday evenings became kind of chaotic and moved it to Friday morning at times, Wednesday morning at times.

4:02But I'm a big believer in the fact that there's a study actually out there that says if you put something on your calendar, it's 70 % more likely to happen. And then I recently learned about another tip from Emily Pote, our benefits manager here at The Motley Fool. She started doing things with a friend, with a money buddy. She calls it their financial fun night. They just do their own separate finances, but that's a standing date with another person, so they know that they're going to sit down and take care of it. I thought that was a pretty good idea. All right, let's move on to step number two, complete your full financial inventory.

4:36All right, step two, the full financial inventory is basically taking stock of everything in your financial life. So we're talking about all your income sources, regular expenses, every single account you have, checking, savings, investing accounts, retirement accounts, your debts, as well as your major assets, college savings or 529 plans, anything and everything related to your family's financial life. That could sound overwhelming, but January is actually the perfect time to do this because year-end statements are already available online or hitting your mailbox. So all that information that you need should be readily accessible.

5:13And this type of inventory serves a couple of purposes. And I think it's one of the more valuable exercises you can do. So if you think of a financial plan as a roadmap, you aren't going to know where to go or how to get there if you don't have a good starting point, if you don't know where you are today. So the benefit of creating this inventory is that it gives you this complete visibility. So a lot of people have forgotten accounts or maybe don't have a clear picture of everything in one place. So it's good to have the opportunity to get that all down and have a full accounting of everything that you have.

5:44And beyond just the benefit of knowing what you have, this inventory really becomes the foundation for everything else that we're going to do this year. Again, you can't make the plan if you don't know where you're starting from. And it's something that people don't always think about, and Bro, that you've talked about, is having a document like this can be very valuable for estate planning purposes. Or if something happened to you, do your spouse or kids know where everything is? So that's important to have for that reason as well. Yeah, that's a very important point. A lot of what you will collect this month will be the foundation for a lot that we do, including the estate planning, as you mentioned, including retirement calculations, including insurance, making sure that you have enough insurance to cover everything you own.

6:23So very good starting point. You will start receiving stuff in the mail, your email or your regular mail. So I think it's a good idea to have a folder next year or wherever you process your regular mail to put all your financial documents, your tax documents, those are going to start coming in a month or so. And I have a separate folder in my inbox whenever I get anything financially related, especially at the year end, I put it there. So a couple other tips there to consider. All right, let's move on to step number three, track your spending for 30 days. So tracking spending is something that can get a little bit real for some folks.

6:59So we're going to start off with tracking your spending for at least 30 days. Ideally, you track longer, 60 or 90 days is going to give you a better picture. But 30 days is a good start because that's a little bit more manageable and can give you some valuable insights. And the goal here is to capture every single dollar that goes out, whether that's your mortgage payment to your$4 coffee to your streaming services that hit your credit card every month. And this type of exercise is important because most of us genuinely don't know where our money goes. We may think we do, but until you actually track it, you're probably going to be surprised.

7:34You might find out that you're spending way more on restaurants or DoorDash than you realized, or those small subscriptions, those one-off subscriptions may add up to a hefty amount every month. So just beyond that awareness, this tracking really serves as a foundation for so many other financial planning activities. So when we get to retirement planning later this year, we're going to need to know how much you actually spend to live your life. You can't figure out how much you need to save if you don't know how much you need. And this kind of 30-day snapshot starts to give you that baseline. And there are several different ways you can track spending from very low-tech, writing things in a journal, to spreadsheets, to more high-tech financial planning and budgeting apps.

8:15So there's definitely a lot of systems out there. You can find one that works for you. Yeah, and I'll just emphasize that there are so many ways to do this, and it will depend a lot on your preferences. What do you want to interact with? Do you love spreadsheets? Do you want an app on your phone? Do you want something on your desktop? So that's something to think about. A lot of these methods are free. Some will require a cost, so you think about that one as well. And I think it's also important to think about whether you want to choose something that aggregates information from your bank and brokerage accounts.

8:47A lot of apps will do that, like Empower, Good Budget, Monarch Money, Quicken, Rocket Money, Tiller, YNAB. Those are all ones to consider. But then there are just regular old spreadsheets, and you don't have to start from scratch for that. There's a lot of free templates available out there online. One of my favorite websites for such things are budgetsaresexy.com. It's a great place for free budgeting templates. Tiller is one that you can pay for, but they offer free templates as well. And the Microsoft website actually has tons of free Excel templates. So if you're looking for a way to track your spending through a spreadsheet, that's one way to go.

9:22All right, let's move on to step number four, calculate your personal net worth. So if you've never calculated your net worth before, it's actually pretty straightforward. Your net worth is simply everything you own minus everything you owe. So you just take your assets, bank accounts, investments, retirement funds, home equity, subtract your debts, mortgage, student loans, credit cards, car loans. And then what's left is your net worth, which can be negative or positive, depending on where you are in life. And this number is important because it's a very good indicator of your overall financial health.

9:56So income alone tells one story. Savings rate is another part of that. But your net worth tells more of a complete story. Someone could have high income, but also massive debt. So that net income figure is a little bit more revealing. The real value in that isn't the number itself. It's in tracking that number over time. So your goal, no matter where you're starting from, is to see your net worth grow year over year. You can't track growth if you've never established a starting point. So that's part of what we're doing this month. We're planting that flag that says, this is where I am on January 1st, 2026.

10:30and then a year from now, five years from now, you can look back and see your progress. Sometimes we get questions about what should be included in my assets. So I'll just give my take, Amanda, and you can tell me if you agree. Obviously, it's certainly all your investment accounts, your 401ks, your IRAs, your brokerage accounts, your bank accounts, things like that. The questions come for things like, what about my house? What about my cars? What about all this stuff in my house? And I would say house is probably something you want to include there. I'm kind of on the fence about cars. I don't know if you want to include it's a depreciating asset.

11:00On the other hand, if you have a car loan, you're putting that in your liabilities, so you should probably have an offsetting asset there. All the stuff in your house, probably not, but it depends on what you have. If you have some really valuable collections, gold and silver are worth a lot these days, if that is something that you have bought, especially as a potential thing that you would sell in retirement, maybe it makes sense to put that on your balance sheet. What do you think, Amanda? I think that's exactly right. Cars can be included if you have that offsetting liability, but totally agreed with the stuff.

11:33Most of your stuff, unless you're a collector and have things that are antique or have significant value in the resale market, the stuff, although it has value to you, probably doesn't have a lot of value other than that. So it's probably better to not focus on things like that in that overall assessment. All right. Let's move on to step number five, establish your financial baseline summary. All right. So the final step for this month is creating what we call the financial baseline summary, which is basically a one page snapshot that captures where you stand financially today. So you can kind of think of it as the executive summary of all the work that you've done so far this month.

12:09So you've done your inventory, you've tracked your spending, calculated your net worth. And now we're distilling all of that into one clear, concise document that you can reference any time you need to see. And this is important because this is a summary that can serve as an important financial dashboard for you. So when you've got information scattered across multiple accounts, different financial institutions, maybe different spreadsheets and apps, it can be kind of hard to see the bigger picture. So this one-page document brings it all together. It's what you can review during your future financial check-in times to see if you're on track.

12:43It's what you can update as your situation changes. So it just makes it a lot easier to have conversations, whether that's with a spouse, financial advisor, or even yourself when you're making these big decisions. The final thing I would recommend that you put on it is, at this point, January 2026, how do you feel about your financial situation, right? You call it your money temperature or whatever, but maybe put on a scale of 1 to 10, how do you feel? 1 being out of control and completely behind, 10 being on top of everything. and that way you could sort of measure whether you're improving over the course of the year as we work through this financial planning challenge of 2026.

13:23All right, those are our five steps. Amanda, do you have any final thoughts? I would say we've done a lot of talking. We've thrown a lot of information at you and it may seem overwhelming. It may seem like a lot of steps, but I think my biggest piece of advice would be to just take one step to get started. So start with setting that time aside and then once you're sitting in that scheduled financial check-in appointment, try to do just maybe even 1 % more than you did yesterday or last week. So just any small incremental improvement that you can make, any action you can take to improve your financial situation to kind of get this information together, that's really going to lead to big changes over time.

13:58So even if all you can do is something small, take that step, get started, and go from there. I love that. And I'll add something that's similar, and that is just don't strive for perfection, right? Don't spend hours designing the best spreadsheet or looking for the best financial app. Do a little research, but then just get started. Just start doing something. Don't let the perfect be the enemy of the good. You'll have time to improve anything down the road. After all, we're going to spend a whole year on this. But unless you've been impeccable with your money, I promise, promise that you're going to learn a thing or two by putting a money hour on your weekly calendar, calculating your net worth, tracking your spending, and creating a financial baseline summary.

14:38Thanks for joining us, Amanda. Thank you. It's time to get it done, Fools. And Amanda and I just suggested a bunch of items for your to-do list. But permit me to add something else. I'd love to hear your tips and tricks for managing your money. How do you keep track of your spending? How do you track your investments? How do you monitor your progress? How do you get financial things done? If you have a recommendation or unique insight, email it to us at podcasts at fool.com. That's podcasts with an S at fool.com by Tuesday, January 6th. and I'll pass along a summary and some noteworthy suggestions in next week's episode.

15:14Again, email them to podcasts at fool.com. And that brings us to the end of the show. Thanks for listening, and thanks to Bart Shannon, the engineer for this episode. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes.

15:48I'm Robert Brokamp. Fool on, everybody.