I was sitting watching the rain outside the other day in the middle of what is usually a cold and snowy February day. As usual, I started to think ahead to a welcome spring. I also reflected on how busy we all are at the start of a New Year. As we have swung full bore into 2016, financially, most of us are caught between the world of paper and the Internet of Things.
Of course, this then speaks to an opportunity we have at this time every year. For me, I have always specified certain times of the year for home maintenance. Maybe it’s just my OCD, but the arrival of Spring brings to mind spring cleaning. This should also apply to our personal finances. A concept that everyone should embrace is the spring cleaning of their financial lives.
Numbers jumble our lives, from account identifiers and balances to passwords and extra-secure security codes. We receive letters and emails in duplicate, leaving us trying to recollect if we already paid, updated, deleted or simply abandoned that. If financial chaos spills from your laptop and floods your home, address these four simple questions, and a deep, clean financial breath can be yours.
If It All Disappeared, Would You Still Know Your Financial Information?
Three failed password attempts earn a locked screen and a long phone call. Now, imagine you’re overseas, and suddenly you must contact everyone with even a little finger in your financial pie without access to the Internet. Could you do it? You could if you keep master lists. Account numbers and passwords are a start, but maintaining pertinent information for joint account holders and beneficiaries is also key. Section it by type of finance, and you’ll have a valuable resource for emergency and annual review. Just keep it under lock and key!
How Much Paper Do You Need?
If you need it for death or taxes, you need a paper copy of it. Experts recommend keeping tax-associated records for 7 years, RRSP contribution records and annual RRSP summary statements permanently, brokerage statements indefinitely for taxes, recurring bills for the last 2 months, payroll statements for 1 year until you receive your T4, and property records permanently. Don’t forget valuable paper investment notes and certificates, birth certificates or adoption papers, marriage licenses, death certificates and wills, either. Securing hard copy in a locked, fire-safe box ensures you’ll have documentation.
What About All Those Electronic Documents?
If your electronic financial documents hang jumbled with everything else, creating a file directory can provide an organized storage structure. Once it’s set up, you’ll be able to add new documents as you receive and dispatch them. You can set up a directory titled Financial, with folders for each category. At a minimum, you’ll need separate directories labeled: Taxes, Car, House, Medical, Bank and Legal. You can also set up subordinate subfolders. Back it up on a portable drive, and keep a copy with your valuable physical documents.
If I Can Do Only One Thing, What Should It Be?
You need to know precisely what you have versus what you owe. Your assets include the money you’ve saved in the bank, your investments, life insurance cash values and valuable possessions that you could liquidate. Your debts include all of your loans, secured and unsecured, revolving credit balances, credit card accounts, and any other major outstanding expenses like medical bills. Then, evaluate your investments and your debts by interest rate. You’ll quickly spot the changes you need to make, and now that you’re organized, you should be able to make them.
Once we have a method by which to retain this information, it will be easier to access it when it is needed and know exactly where everything is. Most importantly it allows us some peace of mind to know in times of emergency or urgency, we will know exactly how to access our financial information. It allows us to introduce balance to our clients busy lives. It’s just another step to Keeping Life Current.
