Financial & Estate Planning

Streamline Your Financial Picture in 2014: A Simple “To-Do” List

Streamline Your Financial Picture in 2014:

A Simple “To-Do” List

It’s easy to forget things, especially with the non-stop stream of information so common today. We can only keep track of so much in our heads, so we develop our own unique system for keeping tabs, ideal or not. When it comes to our own personal finances, the same is true. We all have a unique way of keeping track. We make lists, use technology, and leave sticky notes on our desk or paperwork on the kitchen counter. It’s not perfect, but it gets the job done most of the time.

But what if something unexpected happens to you and someone else has to step in and handle your personal finances? This might be a spouse, a child, an advisor, a trustee, or someone else. Will they know your system? Will they know where to find important information and can they access it? This could be as simple as where do they find a list of all the bills and how do those bills usually get paid. Alternatively, are you the one that will have to step in and take over if something unexpected happens to one of your loved ones? Do you know what is there and how it all works? Regardless of the perspective, it’s best to have a plan and it’s never too early to start.

Here are the few things to think about for 2014:

Who will step in for you and handle the finances if something happens? Have you communicated your plan, or have you assumed the person knows and will be in a position to handle things with little or no interruption? Have you asked them how they feel about this and are they prepared to take on the responsibility? Do they know who can help them understand everything and stay on track? Alternatively, are there circumstances where you might have to step in, and are you prepared to do so?

A common scenario we see usually involves a married couple where one person in the relationship is responsible for the finances, and the other trusts them to handle things or prefers not to be too involved. There is nothing at all wrong with this approach if it works for you, and there’s not a requirement that the person inheriting the responsibility be prepared to take everything on when the time comes. They can always delegate much of the day to day responsibility, but without knowing what is there and where to start, the process can be cumbersome, time consuming, and often costly.

You’ve probably given this some consideration already, and there may even be a plan in place. If so, we applaud you for taking this important step that many families do not. If you haven’t yet had an opportunity to do so, it’s certainly not too late. In that case, we would ask that you consider the following couple of “to do” items to help you get started.

The items below serve a few purposes, and they’re relatively quick. We’d estimate 15-30 minutes depending on how complex your situation might be. The benefits are a better overall view of your financial picture, which helps with decision making, strategy and thinking through the succession scenario discussed above. They also start the process of better organizing your financial picture, which will hopefully begin saving you time for other things you enjoy doing more.

“To Do” items:

  1. If you don’t have one already, take a few minutes to make a list of what you own (your assets) and what you owe (your liabilities). This is your personal balance sheet or net worth statement.
  2. Then, beside each asset or liability, indicate the best place to look for additional information regarding that item. For example, is it a website, recurring email with a link, a paper statement, or a person?

Don’t worry too much about the order of things, or about being overly detailed. You can always work on refining your list and adding more details later. This is just a starting point, so keep it simple. Once the list is complete, there is no perfect answer for what is next, but we might suggest the following:

  • You could use your list as a place to start the conversation. This could be a conversation with your spouse, significant other, or other family member that has not yet been involved with the finances, but should be at this point.
  • It could also be used as a place to start the discussion for updating your estate plan. We recommend reviewing your plan at least every five years.
  • Another option is simply sending the list to your wealth advisor and asking them if they can help you formalize it, which we know they’d be glad to do. There are a number of tools that your advisor can use to help you stay on top of your financial situation.

The final point we will highlight is the importance of planning for “digital” assets, which is the primary reason for going through step number two above. This step has become essential given that so much of our lives have moved from paper to the web. We’ve heard that the average individual now has 25 different logins that they use. This can be frustrating to manage (have you forgotten your username or password recently?). Digital assets might include logins for investment accounts, bank accounts, mortgages, credit cards, airline miles, bill pay, and so on. However, they also include email accounts, Facebook, LinkedIn, and other similar sites. It is important that someone else be able to access these accounts if the unexpected happens.

Just knowing what you have and where to find it is a big step. And don’t worry, your wealth advisor can help you formalize all of this or help you get started with your initial list. Also, don’t forget to start thinking about who you might involve in the process for managing your finances should the unexpected happen. Doing so will help ensure someone is there and ready to step in and manage what you’ve worked so hard to accumulate.

Thank you and please don’t hesitate to let us know if we can help.

Happy New Year!