• Harry N. Stout

186- Taking a Financial Inventory


How do you begin to get your financial matters under control? Where should you begin? One of the key steps to take is to take an inventory of all things money related. What follows is an excerpt from my upcoming book, Good Money Habits in 17 Minutes Per Day, that discusses this important topic.


Creating a financial inventory isn’t a difficult task, but it can be time consuming depending on how organized you are and how complex your financial situation is. I recommend setting aside a recurring block of time where you can gather information, documents and other pertinent information. In the process, you may also find areas where you can simplify your finances. Take notes on the improvements you can make (e.g., digital copies of information, signing up for electronic delivery of account statements) and make the changes later, otherwise you will lengthen the time it takes to accomplish both tasks.


In your financial inventory, you will want to create a complete list of all of your financial accounts, including assets and debts, real estate holdings, valuable property, such as artwork or jewelry, insurance policies, retirement accounts, supporting legal documents and contact information important to managing your finances. The information gathered should be as of a common date (e.g., June 30) for all of your information. This will facilitate meeting with a financial planning professional, if you take that course of action.


Below are the key steps you can take to create your personalized financial inventory:


For All of Your Accounts

The overall list and supporting documentation you will create for your financial inventory should include the contact information, address, account number, website address, user name, password and other information necessary to access and service your accounts. The list will contain sensitive information, so you will need to protect it by keeping it in a safe deposit, safe, or in an encrypted file online. If you prefer, you can keep the account password list separate—just make sure each is in a safe location.


List All of Your Financial Assets

List the balance or value of all of your financial assets as of a common date (e.g., June 30) including:

  • Bank accounts: savings accounts, checking accounts, money market, credit unions

  • Brokerage and investment accounts

  • Health savings accounts

  • Retirement accounts: IRAs and 401(k) plans, pensions, annuities

  • Education accounts: 529 plans

  • Real estate (use websites such as Zillow, Redfin or Realtor.com for estimated values)

  • Holdings of cryptocurrencies

List All Liabilities/Debts Owed

List all of your obligations and credit accounts owed as of a common date (e.g., June 30). This list should include lender contact information, account numbers, interest rates, key loan terms and the amount owed for each loan in your name or for which you are a cosigner. For each type of obligation the information should include:

  • Credit cards issuer, number and contact information

  • Mortgage debt lender information and contact information for the escrow company

  • Personal loans, include all vehicle loans, student loans and other loans

  • Any loans for which you are a cosigner

List All Insurance and Other Financial Accounts

Make a list of all of your insurance policies including the coverage amounts, premiums and payment due dates. As part of this area, you will need to obtain a copy of your insurance policies (most are sent electronically today). Always download copies and save them to a file on your computer and back it up. Be sure your list includes:

  • Health insurance

  • Dental insurance

  • Homeowner’s or renter’s insurance

  • Vehicle insurance

  • Life insurance

  • Disability or income protection insurance

  • Long-term care insurance

Be sure to list any other assets you own that have financial value. These should include:

  • Valuable artwork, antiques or collectibles

  • Airline miles and various rewards programs

  • Personal belongings such as furniture and electronics, you can handle the valuation of this category as an estimate

Gather Other Financially Related Legal Documents

Put together copies of your other key financial documents. These should include:

  • Your most current credit scores from the three credit reporting services

  • Wills: Living will, last will and testament

  • Durable power of attorney (financial)

  • Divorce decrees

  • Cohabitation agreements

  • Tax records, receipts and related documents

  • Beneficiary designations for bank accounts, retirement accounts, life insurance, etc.

  • Legal business documents, such as letters of incorporation, for any business you own

  • Landlord-tenant contract

  • Other legal documents such as estate planning information

Summary

Taking a periodic financial inventory will help give you and your household a complete picture of your financial situation and create the starting point or status check you need. You will clearly see the assets you have accumulated and the debts you have incurred. It will also force you to know where your key documents are located. Once you have your inventory completed, I recommend to update it at least annually or every time you have a major life event, such as a birth/death in the family, moving, new job, purchase a new home, start/sell a business, etc.

If you're looking for ideas on where to find cash savings, please check out my new book, The FinancialVerse Guide to Savings – 600 Cash Savings Ideas.

The book is priced at $16.99 for print and only $3.99 for the eBook. Cash Savings provides practical suggestions for where you should look for savings as part of your day-to-day life. For most households, I believe they will find at least $600 in annual savings.


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