5 Smart Steps to Getting Your Financial House in Order

Here's what to do while you are healthy and alive!

By

Cindy Morgan-Jaffe

 
Published March 20, 2024
illustration of woman surrounded by finances icons
Nadia Hafid

Last May, a close friend in her 70s was diagnosed with an aggressive cancer. It was a shock for both her and her husband as the prognosis was not good. In early July, we gathered on the front stoop of their row house to check in and share a tender moment.

As we moved from small talk to the realities ahead, our friend’s primary concern was her husband's welfare. Two weeks later, she started an experimental treatment. Two weeks after that, she went into cardiac arrest and died in intensive care.

What was an already sad and stressful time was made even worse by the fact that there were no end-of-life documents in place. As her husband lamented: "We just never got around to it, sadly. It won't bring her back, but not having them added so much to an already terrible situation. I can't believe we didn't take care of it earlier."

Unfortunately, this story is too common. We know that death or the prospect of incapacity could happen at any time or age, yet many of us fail to have critical documents that direct care for ourselves or our loved ones, or that help to avoid costly legal and financial estate matters after we pass.

As the author of “Positive Money — 7 Principles for Living a Rich Life” and a specialist in financial affairs, I have learned why many people avoid doing just that:

· Don’t want to think or talk about death, dying or money.

· Get overwhelmed by the legal and financial decisions necessary to make.

· Put it off because they believe they have time to do so in the future

Assembling a next-of-kin box

When I turned 65 last year, I decided it was time to organize our financial affairs given our five children, a household of pets and assets that involve families of origin. Though we had recently updated estate planning documents, purchased a fire-safe box and had an emergency fund, I was worried that we had no clear direction or process for helping loved ones know what to do in the case of an emergency, or to gain access to our myriad of accounts. Not only do my wife and I have a web of personal and joint accounts, but we each own a business.

Thankfully, I decided to attend a free webinar hosted by a local financial planning firm on how to set up a “next-of-kin box” or “legacy drawer” as they can be called where our loved ones can easily find critical documents, keys and information needed when we pass or become incapacitated. During the session, I heard stories from individuals and families who were ill-prepared to manage the estate of a loved one and ended up with assets being frozen and scrambling to find money for unexpected expenses like pet care or funeral services. I also learned about the probate process as well as best practices for storing and accessing documents in a digital world. As we move more of our lives online, we need to be ever more aware of security issues.

It was sobering.

Though I knew I had taken important first steps, I also knew that I had some work ahead, so I set myself a deadline and got started. The following are key takeaways from my research and experience as well as tips from financial planners.

5 simple steps to organizing your financial affairs

1. Commit and set a deadline. If you know you want and need to prepare documents for your next of kin, ask yourself what stands in the way. Once you’re clear on those obstacles, commit to what you can do and set a deadline and reward for completing that task. (I told myself I couldn’t go on a planned trip if I didn’t have the project well on its way.) If you need help getting past obstacles, first write them down and then reflect on specific beliefs or conditions that make them obstacles. Distinguish fact from fiction.

2. Know what you need. The following documents are relevant to processing an estate and should be updated and stored in a safe and secure place with clear directions for how to access them:

· Estate planning: Wills, trusts, powers of attorney, health care directives and other attorney-prepared documents.

· Real estate: Statements for mortgages, property tax, deeds and utilities; relevant keys to outbuildings and equipment, references for service providers like plumbers, electricians, gardeners, etc.

· Vehicles: Titles and loan statements.

· Bank accounts and credit card statements: Statements for each plus passwords.

· Insurance: Life, long-term care, disability, auto, homeowners or rental and health.

· Investment accounts: Info for financial advisors, brokers, etc., year-end statements

· Income sources: Recent W-2s or 1099s, social security and pension statements, dividend or trust income

· Other: birth and marriage certificates, military service

3. Get professional help. If you’re just getting started, do more research on the resources you need and the associated costs and fees of settling an estate. Though there is much you can do on your own, it is advised to consult professionals (attorneys, accountants, advisors, insurance brokers and realtors).

4.  Create a system and involve others. If you manage the finances, you may already have a system for updating, filing or accessing information. If not, create a simple process that works for you and that can be easily and safely shared with select others. If you have children, help them to understand what you’re doing and why it’s important. Assign them a task to find a certain document. If you have a partner who manages the finances, schedule money dates when you work on the project together. If you think a group or community support would help, organize one yourself or enroll in a course or program offered locally or online. I offer them every few months.

5.  Celebrate success. Most importantly, celebrate the progress you make as it is more of a practice than a one-time project. (It is recommended that you update your next-of-kin box annually and review your will every one to three years.)

Rest assured, when you get your financial affairs in order as soon as possible, while you are healthy, you give yourself and your loved ones the gift of financial peace not just in your lifetime, but for many lifetimes to come.

Have YOU gotten your financial affairs in order? What did you do? Let us know in the comments below. 

 

Cindy Morgan-Jaffe isthe author of “Positive Money – 7 Principles for Living a Rich Life” published in 2023. She is a money relationship expert and coach and offers classes and resourcesincluding her bookthroughthePositive Money Club atwww.positivemoneyclub.com