Part of being an adult is having an idea of what we own, and what we owe. We have a cache of papers or computer files holding our documents. The details, however, can fall through the cracks as we live day to day.
In our lifetime, events will occur where knowing the details are necessary; a marriage, a bankruptcy, a divorce, or a death. The most stressful times in life, and we are hip deep in paperwork.
Assessing your assets and debts during a calm period in your life is a gift to your future self.
Step One: Keep ahold of your income documents, and organize them by date. Common income documents: Pay stubs, W-2 Forms, 1099 Forms, State and Federal Tax Returns, Annuity Statements.
Step Two: Use the sample spreadsheets below as starting points to create your own. Decide on a document storage process: paper or digital folders. If you prefer paper, buy a banker box and a packet of folders. Create a folder for each financial instrument. Make a note on your spreadsheet of where the paper file will be stored. If you prefer digital, you can use an app on your smart phone to scan documents into .pdf files. Create digital folders for each financial instrument. Link computer document folders to an excel spreadsheet by inserting a hyperlink.
Step Three: Make a list of your assets. An asset is property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.
Step Four: Make a list of your debts. Consider whether you have debt management options. Can you negotiate a better interest rate? Can you mediate a settlement?
Step Five: Make a list of your expenses. Whether buying a house, starting a business, paying your child’s tuition, or retiring comfortably, you need a plan. Knowing where your income is spent will keep you on track to meet your financial goals.
Success! If you follow these steps, you will have a centralized list of your assets, debts, and expenses. As you receive statements, file them. As circumstances change, update your spreadsheets.
Next Steps: Consider creating financial safeguards such as a will, trust, or spousal agreement.