New year, new start, new way to do something, an opportunity to new improve your life…at least that’s how we often start the new year, right? Take advantage of those good intentions to get yourself headed in the right direction, whether it’s related to your health, your home, your relationships, or your money.
Enjoy the Process
You may have thought about or already acted on updating your wardrobe or closet or remodeling a room in your living space. I bet you enjoyed at least part of that process. Maybe we could all benefit from the fun aspect of “remodeling” and apply it to something we don’t often consider fun, like money.
Have you Remodeled?
Have you done a Money Remodel yet? Remodel means to remake the structure or style, to fashion anew. That sounds way more fun than “organizing your finances” but that is what a Money Remodel can accomplish. We all likely have room for improvement in the area of getting our financial house in order (which is why I wrote a book about exactly that topic).
Let’s Get Started!
Getting and staying organized is the foundation for making wise financial decisions because an overwhelmed or confused mind does not usually think clearly, therefore, perform effectively.
Compiling a summary and much of the detail regarding your current financial situation can have many benefits. It will assist you throughout your life to:
- Save you time whether it’s paying bills, finding information, or doing taxes
- Keep your documents easily available and findable every day as well as during an emergency
- Help eliminate missed opportunities
- Avoid penalties and/or missed payments
- Give you financial peace of mind remembering what you have in place
Additionally, people you care about will absolutely need to know this information if you become incapacitated or after you are gone. Let me provide some tools here that you can use as a guide to:
• The content needed to capture your current financial snapshot in one convenient location.
• Help you think through and prepare so that your wishes are known and implemented as needed.
• Remind you to communicate with advisors and family about this topic.
Before You Begin
Before you get started on your Money Remodel, you should first make sure your files are current. Do your files reflect the statements you receive? Do you have a file for bank, IRA, annuity, investment, loan, credit card, etc. statements? Are they in alphabetical order somewhere findable in a file, binder, secure online folder, etc? Once you have a labeled file for everything, you can begin.
Your Financial Snapshot
1. To better organize what we have, we must first take an inventory of our finances. My Financial Life at a Glance is one way to summarize it all on one page. Perhaps that becomes the first page in a summary binder, folder, or file that you compile.
Thinking Through the Details
2. Reviewing the detail of the inventory can help you confirm whether you have homework to do or not. Is everything titled and beneficiaried correctly to reflect your wishes? My Net Worth Summary is an expanded version of a net worth statement that you could compile to confirm that you have told your assets where to go.
Communicate with Who Needs to Know
3. Give a copy to someone you trust or tell someone where to find the information when needed.
I personally like and use the idea of a summary binder. It is truly a My Financial Life at a Glance binder. It contains that one-page summary, a detailed My Net Worth Summary, and a tab for a year-end statement from every asset/loan that was listed in the Net Worth Summary. Any remaining details like original contracts, trade confirmations for taxable accounts, past year-end statements, are all in the filing cabinet. So if there is a fire, I know what to grab. Or my executor or financial power of attorney knows what to grab when needed.
One Final Checklist
Maybe you are helping aging parents. Perhaps your adult children need some resources in this area. Or many of us are making the time to declutter and organize our lives to simplify life for ourselves (see my checklist bundle to make things easier for our family before we are gone). Either way, congratulations for providing this gift to yourself AND those you care about, what a great way to start the year!
Marie Burns is a Certified Financial Planner, Speaker, and Author of the bestselling Financial Checklist books. Find Marie on Facebook or contact her at [email protected]
This article was first published at 60 and Me – a community that helps women over 60 live happy, healthy and financially secure lives.