Prioritize and Organize Your Finances in the New Year
The New Year is the perfect time to commit to prioritizing your financial goals and organizing your financial material. Set aside a specific time every day, even for a short amount of time, toward working on this crucially important aspect of your life; your financial health.
Figure Out Your Financial Goals
If married, consult your spouse on their financial goals. Communication is an integral factor in making sure you are both on the same page. Once you both understand your financial objectives, set out realistic expectations on how to achieve them. Many people have multiple financial goals. Some examples of financial goals could be paying off existing debt, purchasing a new home, saving for a comfortable retirement, or future travel.
Organize Your Financial Information
Not to be overlooked, it can be extremely helpful to organize your financial information. Consider creating a financial binder. It only takes one life-changing event to learn the importance of maintaining a financial binder.
Be sure to let family members know the location of the binder, so they will have the vital information needed at the appropriate time. Below, you will find some of the information you will want to include in your binder:
Your Personal Information – Full name, address, phone number, email, birthdate, birthplace, maiden name, children.
Important Family and Friends – Full names, addresses, phone number, email.
Professionals Contact Information – Estate attorney, financial advisor, accountant, insurance agent, and any other professional you may want to include.
Investment Accounts – Include any checking, savings, and investment firms that hold your taxable and retirement accounts. Add the full name of the firm, the account name, the type of account, account number, professional contact, and phone number.
Insurance Information – Type of insurance, company name, account number, and professional contact.
Credit Card Information – Card name, issued by, account number, and phone number.
Loan Information – Name of bank/credit union, address, account number, contact person, loan term, payoff date, copy of loan document.
Bills to be Paid – The company, phone number, date to be paid by.
Document Locator – Include any documents that someone may need to locate to aid in possible fact-finding, in the event you are unable to do so.
Do You Have a Will?
Sometimes overlooked and extremely important to one’s financial organization and peace of mind is a Will. If you have a Will, be sure to do a comprehensive review every few years. If you haven’t drawn up a will, a well-thought-out Will is imperative.
Without it, a person’s estate will end up going through a lengthy probate process. Probate can be stressful and expensive. In probate, the state designates a representative for your estate. Probate can range from minor inconveniences to your loved ones to significant headaches. It is perhaps an unpleasant subject that you wish to avoid, but if you have family, friends, or a charity that you would like to benefit from your estate, you will want to contact an estate attorney and have a Will drawn up.
About Financial and Healthcare Power of Attorney
Another reason for contacting an Estate Attorney and creating a Will is establishing a Financial Power of Attorney and Healthcare Power of Attorney. If you do not have these in place yet, ask yourself how someone will access your money to pay your bills or pay for healthcare not covered by insurance?
A Financial Power of Attorney, known as an FPOA, has authorization from you to access your accounts to cover these expenses. Discuss the full scope of the FPOA with your attorney. The person you choose to be your FPOA should be made aware of your designation and understand the commitments that go with it.
In addition, ask yourself who will make critical medical decisions for you if you are unable?
Designating a Healthcare Power of Attorney, popularly referred to as an HPOA, is equally weighty. You want to choose someone you feel will best represent the healthcare directives you have stated in your Will. When you decide whom your HPOA will be, make sure the person you are assigning the authority to accepts and understands your healthcare directives and the responsibilities that go with them.
Create a Checklist of Priorities
If you have committed to prioritizing and organizing your finances in the New Year, take the time out to outline your approach. Create a checklist of your priorities and number them in the order of importance. Remind yourself of the significance of what you are doing and why you are doing it. Remember, this is not only for your sake but for the sake of your loved ones. Having clear and concise directions and information will help them help you.
Financial wellbeing is an important aspect of a holistic view of health. Comment below and let us know your thoughts about putting these ideas into action for yourself and starting the new year right.
Contributed by: Jane Ellis
Jane Ellis is a former financial advisor from the well-known investment firm, The Vanguard Group. Early in her career, she worked for the investment firms, Neuberger-Berman and Merrill Lynch. Jane is passionate about helping people achieve overall financial wellness. Needing more flexibility in her schedule to work with clients, she became a personal financial coach and began her own business, CARE Financial Coaching, LLC.
During her role as an advisor, Jane discovered clients tended to be reactive instead of proactive. Many were ill-prepared for a significant life event, such as illness, job loss, divorce, or death of a loved one. They were overwhelmed and not able to make crucial financial decisions.
Jane has made it her mission to change this. She stresses the importance of understanding, organizing, and prioritizing one’s finances before a life-altering event should occur. Her focus has been primarily on women because it was her experience that this is where the greatest need is. Jane draws upon her life experiences, both personally and professionally, to help clients achieve financial stability and peace of mind.
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