How To Organize Your Financial Records

Your financial records can be the key to your peace of mind. Unfortunately for most people, those documents are a great source of anxiety and frustration. But that’s all about to end right now.

You deserve to not worry about your finances. One important way to have peace of mind when it comes to money is to know where it all is. If you have a family, you have an added responsibility of course; to make sure your loved ones are able to carry on in your absence. Some people think that if they have enough life insurance, the problem is solved. Not true. There is still the issue of taking care of business.

Organizing your documents is important. I’m going to show you how to do that. As you’ll see, it’s pretty easy.

I must take a moment and explain why this is such a hot button with me. You may already know that my parents died while I was in high-school. My father, the main bread earner, kept all the important financial information and documents on the backs of envelopes, in misplaced folders and in huge stacks and piles scattered throughout his office.

Needless to say, that left me and my siblings in a terrible situation. It was very tough to navigate through. Now you see why this is a very important subject to me.

Even if you don’t have any dependents or a spouse, you’ll be far better off simply by organizing your financial documents effectively. True, if you get hit by a bus, it won’t matter…..but what if you get hit by a Smart Car or Prius? If that happens, you’ll just be incapacitated (the automobile will be totaled). Someone will have to handle your financial affairs. Here’s how to keep your finances organized:

Account Numbers and People You Do Business With

Create a spreadsheet in a computer. List all your accounts, the account numbers, the websites, the passwords, pins and contact person at each institution. For bank accounts and investments, list the current values. This document will also serve as your balance sheet.

Don’t take the easy way out and write it on a piece of paper. This will take you more time in the long run because your accounts will change over time. If you keep a spreadsheet, you can easily update each account as the information changes. If you use a piece of paper, you’ll have a mess and you’ll end up redoing the document all the time. This one spreadsheet will act as the cornerstone of your family financial planning. Take time and take it seriously.

Using the same spreadsheet, open a new tab and name it “Important Contacts”. List your legal, tax, insurance and investment advisor contact information.

Budgeting

I highly recommend that you and your spouse become proficient at tracking your spending. Use a budget tracking program like “You Need A Budget” and make sure to take turns updating the data. Then, each month meet to discuss if your spending is in line or if you need to make changes. This exercise has tremendous benefits I’ve discussed before (like helping you and your spouse spend less money) but for our purposes, this insures that your husband will be able to take over the budgeting in case you can’t do it.

If you have been the only one managing the budget, your spouse won’t be able to make intelligent decisions about investments or spending if he doesn’t have experience with the process. Doesn’t he deserve better? Well…..do it anyway. You’ll feel better about yourself.

Income Sources

Remember, you’re creating this document to empower your spouse to take over in case you are taken out of the picture. How is your family going to survive from an income standpoint? What will the sources of income be? Social security? Pensions? Life insurance? Investments? Spell it out on another tab of this document.

Documents

I suggest you keep a physical folder that has your family trust or will, your Health Powers of Attorney and last 5 tax returns. Include copies of passports, birth certificates, real estate documents and vehicle registration too. If you own a small business, keep the documents for your business in that folder too.

If you want bonus points (and you should), scan all these documents and put them on a flash drive for your spouse as well as keeping them on your computer password protected of course. As an extra level of precaution, tell your CPA or attorney or financial advisor the location of all these documents on the computer and the password to access it.

I hope you never have an emergency. But if one comes up your spouse will be so distracted that he’ll forget everything. Telling him where everything is might be a good start but keeping everything organized is far more effective.

Have you organized your financial records? How do you update them? How do you safeguard those important papers? Does your spouse know where everything is?