If this year were a vanity plate, it would say CHAOS 2020. Medical, economic, and emotional crises are hitting every generation at almost every socioeconomic level. This onslaught of uncertainty has revealed the complexity and vulnerability of our personal finance ecosystems.
Working with our clients this year, we are certain of one thing — you need to be well-prepared for disruptive change.
If you’ve ever assisted a family member or friend in an emergency and had to navigate their personal financial life, you probably wished you’d had a roadmap. Even if you found clues in the volumes of paper, it would have still been a challenge to prepare taxes and handle financial affairs.
Now, consider if someone had to do the same for you.
Better Organized = Better Prepared.
We recommend two steps for personal finance preparedness: First, take inventory. Second, simplify. Then you can actually organize everything.
The process of simplifying is in itself a bit complex. So, in Part One of this article, we’ll give you guidelines for taking inventory. In our next post, we will work on simplifying.
Personal Finances Inventory
Your first goal for personal finance preparedness is to identify and document all of your assets and liabilities. These are the components we see most often, but each individual or family is different, so your list may vary.
List Your Assets
Banking
- Checking/Savings Accounts
- Safe Deposit Boxes
- – Bank name & branch address and phone
- – Location of the keys
- – Person(s) authorized to access
- – List of box contents
- Certificates of Deposit
Investments
- Brokerage accounts
- Paper stock certificates
- Custodian and/or transfer agent
- Sources of all dividends and interest payments
- – If you receive payments from unknown accounts, use the payment information as a clue to identify the account.
- Non-publicly traded assets
- Foreign bank/investment accounts & other assets
- Rental properties
Retirement Accounts and Pensions
- Review all current and previous employment to capture all benefits and accounts.
- Pensions
- – Make sure all former employers have your up-to-date contact information.
- – Review payouts and spousal benefits.
- – Review medical benefits.
- IRAs and 401Ks (all types)
- – Confirm and list beneficiaries.
- Social security benefits (including those based on divorce or death of spouse)
Insurance Policies
- Medical & Dental
- Home
- Auto
- Umbrella/Excess
- Life
- – Employer-based and privately purchased
- – Term and whole
- – Beneficiaries
- Long-Term Care
- Medical Catastrophe
- Pets
Royalties
- All intellectual property that generates royalties
- Companies issuing royalties
Loans to Other People or Organizations
- Interest rates
- Terms
- Borrowers
Collections: Art, Antiques, Automobiles, and Similar Assets
- Provenance documentation
Real Property
- Primary residence
- Other property
- Co-owned property
- Property in other countries
List Your Liabilities
- Mortgages or liens
- Education loans
- Auto loans
- Personal loans
- Household item financing
- Tax debt
- Bankruptcy payments
List Your Credit Sources
- Credit cards
- – Every card in your possession
- Lines of credit
Visibility Accomplished
You can’t simplify what you can’t see, so the value in taking inventory is two-fold – visibility of all your personal assets and liabilities and the ability to simplify.
Simplicity will help you get better organized, and that’s really the only way to achieve personal finance preparedness.
When things are simplified, organized, and manageable, you’re doing your part to help yourself and those helping you during disruptions to your health or employment, or other unexpected circumstances.
Watch for Part Two of this article, where we’ll help you move further toward personal finance preparedness by streamlining, consolidating, and eliminating items in your personal finance inventory.
Eddy & Schein Group is here to help with personal finance preparedness and other organizing challenges. Visit our Services page to see what we do, and give us a call if you’d like to learn more.
Read more about this topic in these other blog articles: A Lesson from Sherlock Holmes: Financial Sleuthing and Are You a Financial Hoarder?