Make sure your loved one knows where to find your financial information, should something happen to you.
The following is a guest post from Bob of Christian PF. If you enjoy this post, consider subscribing to Christian PF.
When I was about 14 years old, my uncle suddenly and unexpectedly went home to be with the Lord. He had meticulously taken care of the finances for their family and left my aunt on a very solid financial foundation. Obviously, this didn’t take away the pain of him being gone, but his preparation eliminated additional stress that would have been present without it.
It’s one of those things we all prefer not to think about, but it is always better to be prepared. My aunt is still reaping from what my uncle sowed by having his things in order.
My FLOP
Being impacted by my uncle’s premature death and wanting to do everything I can do to help my wife, I decided to create a system for keeping things organized.
It has been a work in progress over the last few years, but has evolved into a very helpful tool. Simply put, it is a single file or location for all your financial account details. I call it a FLOP (Financial Life on One Page). FLOP sounds a little cooler than FLOOP, but not much ;)
In adding to it over the last few years it has come to have three main purposes. The first being that it is a:
1. Balance Sheet
One of the best pieces of advice I received about 5 years ago, when I started my journey to clean up my finances was to keep a balance sheet. I didn’t really understand why at the time, but I did it anyway. I have updated it twice a year since I started it and it has been a great source of encouragement as I have fought to get out of debt.
The reason it has been such a source of encouragement is because a balance sheet not only takes into account the debt you have been paying off, but all of your good financial decisions. So increasing your savings, paying down debt, making wise purchases all will affect your balance sheet in a positive way.
Also, looking at the size of your debts or assets does not necessarily give an accurate report of your financial condition. To get a accurate picture of your financial situation you need a balance sheet to calculate your net worth. It is very easy to do and is just a big subtraction problem:
Assets – Liabilities = Net Worth
If you have never started a balance sheet, I recommend doing it. It is a simple way to track your financial progress as you move towards your goals. For most people it shouldn’t take more than an hour to gather up all your account balances and asset values.
And as with most things, you are either moving forward, or you are going backwards. If you are increasing your assets or minimizing debts your net worth should be growing. If your net worth is getting smaller, then it is an indication that you should re-evaluate how you are spending your money. And even if your situation is not very encouraging, it will force you to see the financial truth so you can make adjustments as needed.
How to create a balance sheet
- Use Excel, Google docs, or some other spreadsheet software.
- List every Asset you can possibly think of from cars to stocks to jewelry for the amount that you could quickly sell it for. (To save time, you can lump together smaller assets like “misc. household items”) Total these items up to get a subtotal of your assets.
- Below the Assets total, list every debt or liability that you have. Mortgages, credit cards, student loans, they all apply. Total your debts to get your liability total.
- Subtract your liability total from your asset total to get your Net Worth.
2. Organize all my login information
Another piece of good advice I got a few years back was to create an extremely unique login ID and use it for every website that I had an ID for. I followed the advice and it has helped, but it is not a fail-proof system. Some sites require your email address, some want more than 8 characters, some want less, etc. And in this day in age, where you just about need to login to open your refrigerator, it can be difficult keeping track of all your login information.
After adding all your accounts in the balance sheet section above, you should have all your account information listed already and you can just add a column to add your login for that company. If you use various passwords you could list them in another column as well, but consider using a password hint rather than the actual password. I still come back to my FLOP at least once a week to figure out a login that I forgot about.
3. Financial roadmap for my wife
The third and most important reason for my FLOP is for my wife. In most families, one person manages the finances and has a better understanding of the overall financial picture. I am that person in my family. Are you that person in yours?
If so, would your spouse (or other beneficiaries) know where to find your financial information? Insurance policies, bank accounts, investment accounts, safe deposit boxes?
I know for my personal situation I know a bit more about our financial details than my wife does. I use my FLOP to layout all of the pertinent details for my wife, if she ever needed them. It contains the name, phone number or web address of each institution, our account numbers for those institutions and any other pertinent info that may be needed.
I then burned the file to a CD and kept it in our safe. Every year or so I put a copy of the updated FLOP in there.
Losing a loved one is a terribly difficult process. Having a “roadmap” prepared in advance for your loved ones is a great way to help eliminate unnecessary stress.
If you are interested, you can download a copy of my template for my FLOP.
A note from Lynnae: I know this is an area I really need to work on. Are you prepared if something were to happen to you or your spouse? If not, take some time to get prepared. I know after reading this, I’m going to make sure I carve out the time to collect my information, so my husband is OK should something happen to me.
Photo by nattu.
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What an incredible post. I will definitely start working on this for my family. Dave Ramsey has a similary concept called the “Love Drawer.” But this is a great article and I will share it with others for sure!
I am still trying to sort out this stuff. We have done a will, but things are dynamic. We have closed some accounts, opened new ones etc.
The updated info is mostly in my lap top which is password protected.
This road map thing makes sense. I am not sure of making a CD though. I have been thinking of preparing a letter with all the passwords and the way I organise my files in my computer and ask our family lawyer to hold in trust.
@Kristen
THanks! It has taken some time to get the whole thing up and running, but once it is in place – it is pretty easy to maintain.
@Father
yea, the CD is what works for me, but really putting it any place that your loved ones will be able to find it should work fine
Thanks for this article!
Recently, I created a shared Google Docs spreadsheet with my various immediate family members, and had each list out all of the locations of their bank accounts and other sensitive accounts. No login information was recorded, just the name of the bank, the type of account, and which family member it belonged to. This is, by no means, a complete FLOP / Love Drawer / etc., but if something happens to any of us, we’ll at least know where we need to go to settle accounts. The next step is to get a more complete FLOP file together for my wife.
Thanks for this great post! We just went this past week and had our wills drawn up. Our attorney basically told us to do this very thing. List all our assets and liabilities on one page and put it in a lockbox with our wills and tell whomever will be the executor. He also suggested listing a contact number on all our bank accounts, IRA’s etc.
Blessings!
Michelle
I think this is a great post. I have relatives that did nothing in prep for death and others that even planned their funerals when death was eminent. By far it is easier for all involved when there is preparation. This shows love for those who will be left to sort it all out.
After seeing the chaos that insued for my kids when their father passed on (we were divorced) and taking 5 years to get the estate settled, I decided that I didn’t want my kids to have to go thru that again when I died.
So…everything they’ll need is in a fireproof filing box. They all know where it is and what it’s for. I think in times of crisis, the paper copy works just fine and is quicker. My financial statement is on ledger paper, handwritten, and will work just fine, as it has for years. I update it in Jan and July.
It also contains the will and 3 years of tax returns, as well as a paper trail of anything financial, including grandkids accounts, and my retirement info. also passwords.
Unless your representative is a signature holder on your safety deposit box, they will NOT be able to get into the box (in a timely manner) after your death. So that’s not a good place to stash your will.
I have a folder with all of the information in it. It also includes insurance, copies of passports and Social Security Numbers etc. Wife and small circle of family know where it is in case something happens.
One note though:
Be pretty careful using one sign in to all financial sites. The most common sort of virus now is a key-logger that tracks that info. You don’t want them to hack one and get them all. I keep our log-on info with the folder as well!
Yes! What an excellent article. I have been saying this for years. I have copies of everything I need in one zip up binder, and copies of other important paperwork in a safety deposit box.
Even if you don’t pass away, you can use it for any emergency, even changing jobs and comparing credit card offers. Having all of your financial information in one place is the nicest thing you can do for your family besides having a life insurance policy and a will.
Any time someone passes, it is the toughest thing in the world for the surviving family members.
I hope people take your advice to heart and really use it, because you can never take away the pain of a loss, but you can spare them a lot of pain and frustration along with their grief. Good article.
Awesome post! I took a crown class at my church and they required stuff like this. I think it is vital to keep track of your finances…
Lara
@RacerX
that is a good point – thanks for sharing
That was truly great advice! My Grandmother just passed away and finding all of that information was difficult and I can see that I would not want my family having to search through paperwork for hours on end. Thank you for the template, I will put it to good use!
And of course, don’t forget about a will, and if you have any funeral requests write those down too.
This is a really good idea, and something I should get round to doing myself. I’m single so the problem is compounded – who knows who in my family would end up having to deal with all my stuff
I think this is probably one of the most considered and thoughtful things that a person can do!
Thank you for sharing this information.
Be well…
Great article and very useful too – I made it up more for me, rather than in case o emergencies, and it really was interesting to see what cropped up. It gave me a better understanding of my financial worth. Thank you!
Incredible post… So incredible, in fact, that I decided to DIGG it…
http://digg.com/business_finan....._Page_FLOP
Thanks to Bob and Lynnae for sharing this!!