5 steps to organizing personal finances
If something happened to you tomorrow, are your loved ones prepared to handle your finances? Or would they spend days sorting your papers and tracking down information in a frenzy?
Outlining and organizing personal finances—regardless of your life stage—is an act of love and consideration toward the people who matter most to you.
“Losing someone is hard enough,” says Jenny Smith, financial professional at Principal®. “Organization allows them to deal with grief rather than chaos.”
Planning for an emergency or for when you’re gone is difficult to think about. Make it quick and efficient with our five-step plan.
What you’ll need:
- Portable file box
- Manila folders
- Folder labels
- Pen or marker
- Account numbers and contacts
Step 1: Gather important financial documents.
Use our downloadable estate planning sheet (PDF) as a guide. Think about what accounts should be closed, retirement benefits claimed, property titles removed, things like that.
What other financial papers are required after death? Review our survivor’s checklist (PDF).
Step 2: Write down financial and legal information.
Document all account numbers, phone numbers, and special instructions using the planning sheet from Step 1. Never assume family members know who to call or what information they need. Put yourself in their shoes. Thinking through each scenario now helps eliminate guesswork in the future.
When his father passed away from cancer, Eric Foll, an investment writer based in Portland, Oregon, was thankful for a neatly organized blue folder left in the basement. “He had done enough work that we were able to take care of all the financial entanglements in a couple of hours,” Foll says. “We didn’t have to put much thought to it.”
Tip: If you haven’t named or reviewed beneficiaries for your financial accounts, do so now, while all the information is in front of you.
Step 3: Designate folders.
Choose a color for each section of your filing system. Suggested categories:
- Financial management
- Investments and retirement
- Insurance policies
- Personal documents
Step 4: Start organizing financial and legal files.
Stuff papers in their appropriate folders. Avoid clutter—store only what’s needed. For example, you don’t need every monthly bill or 401(k) statement from the past three years. The most recent month will do. You may have to keep tax records, on the other hand, for several years.
Step 5: Store and inform.
Stow your files somewhere secure, such as a fireproof safe or safe-deposit box.1 Tell two people you trust where to find it or leave that information with your financial professional. Set a reminder on your phone or computer to review and update information at least once a year.
1Safe‐deposit boxes may be sealed until after the owner’s funeral, so be cautious about what you store in them.
The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
Mint, YNAB, and Quicken are not affiliates of any company of the Principal Financial Group®.
Insurance products issued by Principal National Life Insurance Co. (except in NY) and Principal Life Insurance Co. Securities and advisory products offered through Principal Securities, Inc., 800-247-1737, Member SIPC. Principal National, Principal Life and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392. Jenny Smith, Principal National and Principal Life Financial Representative, Principal Securities Registered Representative, Financial Advisor.
Principal, Principal and symbol design and Principal Financial Group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.