This is the first post of a 10-part series, which will highlight each area listed below:
1. Financial Organization
2. Personal Spending Habits
3. Identity Protection
4. Protection Planning and Insurance Coverage
5. Tax Planning
6. Portfolio Net Worth
7. Stock Options
8. Estate Planning
9. Retirement and Education
10. Dream Planning
11. Career Opportunity
I know for most people organization is not something they look forward to, but I guarantee that if you spend time up front getting thing in place it will help you with your financial planning. Knowing your current financial state is half the battle.
NOT BUDGETING & FINANCIAL RULES
Before we get started let’s make sure we are on the same page. If you are looking for a budget to follow and a rigid set of spending do’s and don’ts, you will not get that from this series. Everyone’s finances are intimately personal and vastly different. This series does not take the place of your financial advisor or your accountant.
DEMYSTIFY AND SIMPLIFY YOUR PERSONAL FINANCES
What we can provide is more knowledge about your personal finances and simple action items that can change the way you view your finances. The goal of this series is to help you demystify and simplify your personal finance.
MARATHON NOT A SPRINT
You will need to dedicate some time to doing this if you do not already have a system in place. I would give yourself at least a couple months to get your system in order, starting with your paper files, followed by your electronic records, ending with your personal information. Once your finances are organized we can look deeper at your spending habits, which will be covered in post #2.
AVOID PAPER…SCAN IT
As technology continues to evolve, I do my very best to stay away from paper files and scan documents to save digitally. I would recommend downloading the app TurboScan on your phone, which makes scanning your files super simple. When you receive an important document, take a picture in your scanning app, turn it into a PDF, and then save to your electronic financial files.
If you have broad file categories both electronically and for paper, it makes organization easier. Here are my suggested categories that I use, feel free to adjust:
4. Income Statements
5. Insurance Policy
6. Outstanding Loans
7. Financial Statements
9. Medical Records
10. Warranties & Receipts
11. Will & Trust
12. SSN Statements
13. Estate Documents
You will notice I do not have a folder for bank account, charity and credit cards. The reason for this is that most banks keep everything electronically; if I ever need to refer to anything, I log onto my banking websites. I do save the end of the year financial statements in a folder. For charity contributions, I place anything that has to do with taxes in to my tax folder; therefore, if I donate to charity, it goes into the Tax folder. I find it easier come tax season to have anything that can be written off in one location.
Recommendation: HomeFile- Financial Planning Organizer Kit by J. Michael Martin & Mary E. Martin (not sponsored)
The system HOMEFILE follows is fool-proof and I could not recommend the system more. You are given already created file folders with an index to help you know where to file items. The folders indicate what you should keep and what you should throw away. The ultimate goal is to get rid of all your paper files and transfer them to your electronic files.
Recommendation: External Hard Drive- Seagate Ultra Slim 1TB (not sponsored)
I create a yearly folder for my documents and label the main folder "2017 Financial Planning". The sub-folders are mentioned above, which are the same as the paper folders. I save the current year folders on my password-protected computer hard drive and at the end of the year, transfer the files to the external hard drive. I also save my files to Dropbox to have a back up in case of a house fire.
PERSONAL INFORMATION ORGANIZATION
The personal information center is for all the floating important information which is normally scattered on insurance cards, letters, website, etc. I created an electronic list, which includes the follow important information:
1. Auto (basic car information)
2. Bank Accounts (account information, phone number)
3. Credit Cards (Including lost card phone #, credit limit)
4. Emergency Contact List (name, phone #, relation)
5. Health Insurance Providers (name, phone #)
6. Insurance Policies (policy #, agent phone #)
7. Investment Accounts (agent name& phone #, account #)
8. Keys & Security System (spare key location, security system code and phone #)
9. Personal Advisors (name & phone number)
10. Personal Data (for each family member)
11. Real Estate (purchase date, total cost, loan office #)
12. Safety Deposit Box (Bank location, box #)
13. Wills/Trust (date of will, executor, location of will)
You can create a paper list- just make sure that once your list is created, you place it in a safe location such as your security box. If you create an electronic list, make sure it is password-protected so if your computer is stolen, they will not have access to your confidential information.
If you have never organized your finances, these action items may seem overwhelming. My recommendation is to create your file folder categories and start with your new documents, which arrive via email or mail. You can always go back through your old documents at a later date.
By Elizabeth Cumby, M.B.A. - Entrepreneur & Finance Expert