A Whole Bunch Of Financial Organizing Tips
Tom Herman
Jul 9, 2007
How do you know whether you need to spend more time getting your financial affairs organized?
Answer: When a professional organizer sends you her latest book on the topic -- and you lose it before you get a chance to open it.
That's what happened to me recently, much to the amusement of several colleagues who sit near the mountains of books, papers, magazines, notepads, umbrellas, coffee cups and tax publications lying around my work space and spilling out of more than a dozen file cabinet drawers. One friend politely informed me I don't really need an expert organizer. I need an archaeologist.
But it's never too late to get started, and even the most paper-addicted pack rats can benefit from the growing number of books, pamphlets, software programs and getting-organized kits that focus on personal finance. Among the most popular software programs are Intuit Inc.'s Quicken and Microsoft Corp.'s Microsoft Money. They can help you pay bills, figure out where you're spending your money and create a budget. Millions of people have turned to these and other online products offered by banks and other financial institutions to pay bills and manage finances.
Getting your finances neatly organized is critically important if you care about your family and other heirs. Missing documents, records or stock and bond certificates can be hazardous to your family's wealth -- in addition to being frustrating and time-consuming experiences.
Some of the best organizing tools are free. For example, Merrill Lynch & Co., the nation's largest securities firm, offers a handy document you can download and use to jot down key personal contacts, location of important papers and other items. ( http://askmerrill.ml.com/publish/marketing_centers/articles/essentialdocuments). More free planning tools and organizers can be found on the Web site of Ronald Rogé, a financial planner ( rwroge.com/financial_planning.html).
Here are some thoughts from lawyers, accountants and organizing experts on how to be better organized, including what documents to keep, where to keep them and for how long.
Getting Started
Start by compiling a list of key people to call, including relatives, physicians and lawyers, in case of emergency. I carry around such a list in my wallet. I started doing this after a family friend was hit by a car on Park Avenue in New York City many years ago. She had no personal identification papers on her. Fortunately, a woman who had witnessed the accident raced to her side and asked her, just before she passed out, if there was someone who should be contacted. Our friend gave her the name and phone number of one of her sons, who raced to the scene. Our friend survived and told me that her saga underscores the importance of having a "loved-ones" list with you whenever possible.
Consider photocopying all your credit cards and other important items you carry in your wallet. If you lose your wallet or it's stolen, you'll know exactly what's missing and how to contact the credit-card companies. Store this list in a safe place at home with other details, including the location of any unused gift certificates you have received, as well as your point totals for frequent-flier or other similar programs.
Make sure to tell your family and advisers where you keep important documents, such as your will, health-care proxy, living will, insurance policies, household inventory, deeds to property and important tax records. Be sure to include the location of your bank safe-deposit box -- and where you have stored the key.
It's not enough just to compile these lists. Make sure to update them regularly, says Stephanie Winston, a professional organizer based in New York City and author of several books on the subject (including "Getting Organized," the book I somehow managed to lose).
Beware of mindless clutter, Ms. Winston says. She recommends a paper-handling system called "TRAF," which means toss, refer, act or file. While it may feel good to save everything, that could backfire if you can't find what you need in a hurry.
Pay attention to security. Store your information in a safe place. All your careful organizing plans can easily backfire if you allow your information to fall into the wrong hands. If you use a Palm Pilot, as I do, use passwords to protect all the information you've stored there. If you store your list on your computer, be sure it's password-protected. Also be sure to print out copies regularly and give them to a trusted relative or adviser.
Wills and Other Documents
Lawyers constantly marvel at how many highly intelligent people don't have a will -- and at how many people who do have wills haven't updated them for decades. Granted, nobody likes thinking about this subject, and lawyers say clients often are superstitious. Those clients fear that if they draw up a will or update it, they're sure to die on the spot.
But remember: When someone dies without a will -- or without an up-to-date will -- that can lead to lengthy family feuds, even over seemingly insignificant details.
Another reason many people don't have a will is they're uncomfortable discussing such delicate subjects with children and other family members. Get over it. Failing to have this conversation is an invitation to trouble.
Consider giving the original copy of your will to your lawyer or some other trusted adviser, along with the location of key documents. Make sure to tell your heirs what you've done. Don't put the only signed copy in your safe-deposit box; your heirs will need to get the will quickly.
Take the time to make sure you have a well-written power of attorney, and pick someone you trust completely.
Check with your lawyer to make sure that any power-of-attorney form you sign does precisely what you want it to do. For example, if you want the person holding your power-of-attorney to be able to make gifts of money or other property on your behalf, say so in writing. While state laws may vary, be as precise as possible on this subject.
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