You need to get your finances organized for two people:
1. For yourself.
- Not feeling in control of your finances can lead to stress and anxiety.
- It is impossible to make informed financial choices without first understanding where you are.
- You deserve the peace of mind that comes with knowing you are taking steps to achieve your financial goals.
2. For your loved ones.
It’s not fun to talk about. If something happens to you tomorrow – where does that leave your family? Will they be able to pull all of the pieces together if you’re gone? During my career I’ve seen countless situations where someone’s own procrastination became the burden of a family member.
To make matters more challenging, your family doesn’t necessarily know where all your accounts are located, who the beneficiaries are, or what your wishes were. You owe it not only to yourself, but to your loved ones to get organized and take control of your own financial future.
You already know getting your financial life in order is important. So why do so many of us put it off? For many, simply inertia can be tough to overcome. What makes matters worse is our fear of the potential for “bad news”. This makes us put off this task even longer, which only amplifies our problem. The longer we wait, the more disorganized we become.
Don’t be too hard on yourself when getting started. And if you need help, that is okay too. Financial professionals are used to seeing all types of different situations and are there to help – not judge.
Perhaps all of this is best said by an old Chinese proverb: “The best time to plant a tree was 20 years ago. The second best time is now.” Let’s get this one checked off your list.
The final hurdle that many face is not knowing where to start. I’ve found most people prefer to manage their finances in 2 different ways – “Do it myself” or “Step-by-step guidance”. I have provided a guide for each personality depending on your preference below.
Do it myself:
To improve your financial outlook, you need to get ultra clear on 3 things:
1. The current state of your finances (Organize)
2. Where you are trying to go (Goals)
3. Action steps to achieve your goals (Plan)
Ask yourself the question: “If I were to get in an accident tomorrow, what information would my loved ones need?” Anything on that list is something to include in your financial plan. To help you get started, I’ve compiled the table below with the information you need to gather and where to find it to get organized.
|Financial Data to Organize||Best Source|
|Income & Tax Information||Any of these sources will give you an accurate representation of your income:
|Social Security Retirement Benefits||
|Employer Benefits||Benefits to locate and save are:
From Intranet – best to use for most detailed summary
Not on intranet – less detail but may be used for limited information
Detailed Mayo Clinic benefit information can be found at:
|Employer Sponsored Retirement Plan||Any of these methods will give you a view of your 403(b) or employer sponsored plan
|Investment Accounts||Any of these methods will give you a view of your other investment accounts
|Student Loans||For federal student loans:
For private student loans:
|Debt||Consider mortgage, car loans, other debt, and credit cards you carry a balance on.
Key topics that you will want to make sure your financial plan covers are:
1. Bank balances
3. Loan balances & interest rates
5. Estate plan
6. Life & disability insurance
7. Financial goals
8. Retirement income
9. Tax strategy
10. Investment strategy
Depending on how handy you are with a spreadsheet you can begin to construct your net worth and budget in Excel. You can also aggregate your account information in one place such as Mint or You Need a Budget, but will need another document to keep track of the other information in your financial plan. Wherever you keep this information, make sure security is a priority so nobody has access to it unless a triggering event occurs such as disability or death.
Step-by-step guidance: If you are looking for an easier way to find all of this information and consolidate into one document, complete these 3 steps:
1. Enter your info below
2. Schedule your financial summary consultation
3. I will provide you a professional organized financial summary
It is that simple. This is my way of saying thank you to our healthcare workers at Mayo Clinic.
Implementation: Your job isn’t done once your finances are organized. You will need to take action on problem areas and update your plan regularly.
You will want to update your financial plan document at least semi-annually to ensure you are staying on track and making necessary changes. Some tasks may require attention more frequently, such as budgeting (monthly) or investments (quarterly). Some areas may not need to be updated for several years, such as your estate plan. Create a schedule and set reminders on your calendar for each task. Don’t let the status quo become your financial “plan”.
I use MoneyGuidePro for organizing the financial plan and aggregating account balances in one place. The cost of professional software alone is about $150/month but is included for all of my clients. To get your complimentary financial summary built in professional software, complete my step-by-step guide to get started. You can see a sample financial plan summary I provide clients here: Financial Plan Summary Example.
For those that don’t have the time, desire, or expertise to manage this on their own, it may make sense to hire a professional to help you get organized and stay on track. If you choose to hire a financial professional, make sure the advisor is a fiduciary, has transparent fees, and is competent (Yes, I made a guide for that too).