“Getting Financially Organized”

Getting organized and staying disciplined can be difficult with any area of life.  Sometimes when results can be visibly seen it can be a motivator (think staying fit or keeping your house clean).  However, when it comes to our finances, getting organized and staying disciplined can be easily put on the backburner and/or forgotten about.  So, think of this as some encouragement to get organized with something that is typically unseen to the public eye.  

What’s the best way to organize your financial life?  This can be a daunting question but it really doesn’t have to be.  Throughout your life being financially organized is important, but even more so as you approach, and enter, retirement.  Here are some key areas that we think are very important to get organized when it comes to our financial lives.

Investments

Throughout our working careers it isn’t uncommon to switch employers and approach retirement with multiple 401k accounts, some various IRA’s, and maybe some brokerage accounts that our long lost uncle encouraged us to open.  Consolidating your investment accounts can be a great way to get organized and introduce simplicity as you approach retirement years. 

This can start by choosing the platform where you will keep all your accounts (i.e. Fidelity, Schwab, Pershing etc.) and then consolidating various accounts into this one area.  Another benefit of consolidation is that it quickly shines a light on what your overall investment allocation looks like.  Are you overweight in stocks or bonds?  It’s tough to know this when multiple accounts are spread around.  Bringing everything under one roof can get your risk allocation in order and ultimately help to answer the question of how you will accomplish your goals with the funds you have amassed.

Update Net Worth and Cashflow

It sounds simple, but there is power in simply listing out the value of everything you own and subtracting out everything you owe to arrive at your net worth.  This personal balance sheet can help to make important decisions about how to allocate any excess cash and potentially how to prioritize which debts to pay down first.  I personally feel that the net worth statement can be a bigger motivator for people than the monthly budget.

Moving on to cashflow, creating a budget is also simple but extremely powerful.  What will a retirement budget look like and how will it differ from when I was working?  Combining this cashflow view with your net worth can then help to narrow down the question of how you will generate the income you need to satisfy your expenses.

Estate Documents and Beneficiaries

Of all of the categories, this can be the toughest to be motivated about getting in order.  Nobody enjoys thinking about when they will pass away, but the repercussions of not thinking through these important documents can be devastating for your beneficiaries and other loved ones still living.  Additionally, it’s not only thinking about when you’re gone, but having power of attorney documents in place can help to answer questions while you are still living.

At the very least, I would encourage you to have the following documents in place and review them every couple of years to ensure they still reflect your current wishes:

• Will
• Trust (where applicable)
• Durable Power of Attorney (financial and medical)
• General Beneficiary Review

Important Document Storage and Passwords

Finally, if you’ve taken all of the above steps and have done the hard work of getting everything organized then it’s critically important you think about where you store this information securely.  For some, this can simply be a safe or a locked filing cabinet that your spouse or other family members are aware of. 

For others, this could be a secure online vault where you upload your important documents and ensure encryption for security. 

Finally, I highly encourage you to look into a password assistance service such as Last Pass where you can store all of your important passwords and then only have one main password for your beneficiaries to obtain to get access to your accounts and documents.