For those of you who filed on time, tax season is over and it’s time to get your financial house in order.  I have included a checklist below for 10 steps to take now to ensure that all of your policies are up to date, and records organized so that you’ll be protected in the event of an emergency.

1.  Three key items to make sure you own:  A fire-proof safe (Class 350), a shredder, and a CD burner.  In the safe, you’ll want to keep your social security card, will, durable power of attorney, living will, important phone numbers, car titles, appraisals on all valuables,  color photocopies of the front and back of everything in your wallet, and CD back-ups of all your electronic files/records.  If none of the aforementioned records have been compiled, be sure to handle that before moving on to the next steps in order to protect yourself and your loved ones.

2.  Estate Planning Documents: Everyone needs to have an estate plan in place.  I can recommend a qualified attorney if you need one, but the bottom line is that if you do not designate what will happen in the event of your passing, the state of Kansas will.  Typically, this is highly unpleasant for the family of the deceased, so please review your estate plan now and put one in place if you’ve not already.  Some things to look for: the correct beneficiaries should be listed on your insurance policies and qualified retirement accounts, all children are accounted for, and that no changes have occurred since the plan was written.

3. Make a master list of all retirement accounts (IRA, 401(k), 403(b), 457, pensions, and other company- sponsored plans), account numbers, locations where they’re held, and contact info for each.  This is good information to also have in your fireproof file box or with your will.  At the same time you’re compiling the information, take a moment to consider each account.  Is it earning the return you think it could be?  Is it allocated properly when considering your risk tolerance level?  If applicable, you may also want to consider consolidating old employer retirement accounts into an Individual Retirement Account (IRA).

4. If you’re debt free (not including your mortgage), set up a direct deposit from your paycheck or checking account into a savings account to build an emergency fund equal to 3-6 months of your expenses.  While this goal may seem unattainable, it is a necessary step to true financial security.  You may also choose to move this money to a taxable investment account if you’d like the possibility of accruing greater amounts of interest on your savings.

5.  Set all bills to be paid electronically or directly withdrawn from your account.  Make sure you review your bank accounts on a weekly basis, and record all your deposits/withdrawals in a spreadsheet so that you can catch any discrepancies as they occur.  This is a modern way of balancing your checkbook. 

6.  Take pictures of all interior rooms and exterior finishes; the contents of your drawers, cabinets, closets, garage, and storage bins.  Update this file every 6 months; it is common for insurance companies to request a detailed list of all items in the home in the event of a fire or flood.

7.  Take time to sort through all your old statements and records and shred those that are no longer applicable.  While situations may vary widely, I like to keep the following guidelines in-mind when discussing paperwork with clients:

  • Tax Returns (including receipts and supporting documentation):  The IRS has up to three years to audit you after you’ve filed a return.  However, they can also challenge your return for up to six years if they suspect you’ve under-reported your income by 25% or more.  To be safe, you should keep your tax paperwork for six years.
  • Pay Stubs and Form W-2:  You should keep your pay stubs until you receive your W-2 for the year.  Once you receive your W-2 and confirm the earnings on the W-2 match your pay stubs, you can then destroy the pay stubs.  You should keep your W-2’s until you start receiving Social Security benefits.  The reason for this is that the W-2 is usually your best proof of earnings for Social Security in the event there are any discrepancies.
  • Bank Statements, Check Copies (if you have them), and Credit Card Statements:  Bank statements and check copies should be kept on-file for seven years.  As noted earlier, it’s possible you can be audited by the IRS for up to six years, and these documents can be helpful if you are audited.  Many banks offer online statements.  If you receive online statements, make sure you save a .pdf copy to your electronic files.  You only need to keep your credit card statements until you’ve confirmed the transactions were processed correctly, and you have proof the charges were paid.

8.  If you plan to make a large purchase in the next 6 months and will need a loan or line of credit, visit www.annualcreditreport.com to make sure your credit information is accurate.  If you notice any errors, you will need to contact the credit bureau (Equifax, Experian, or TransUnion) directly to clean-up any erroneous information.  Keep in-mind that the average time it takes the credit bureaus to fix their own mistakes is approximately 23 weeks (Source: www.pira.org).  Therefore, it’s important to take action 3-6 months before submitting a credit application.

9.  Do you have a current list of all contacts with phone, email, etc. saved?  Preferably, these should be saved as an electronic file in MS Outlook or Excel, in addition to your cell phone.  Regardless of where you have them saved initially, be sure to keep a back-up copy on another electronic device in case your cell phone or computer becomes inaccessible.  It’s important to back-up your contacts every 6 months (or more frequently depending on how often you add/edit/delete contact info).

10. Finally, assess your current financial situation – Are you where you want to be, or at least on track to meet your goals?  If not, sit down and set some goals for yourself – or call me to figure out what the best course of action is.  I can help you assess what tasks need to be tackled first if the road seems overwhelming, or your goals feel unattainable.  As with anything else, financial security is not achieved through a single large action; but rather, small steps taken in the right direction.

Do you have questions about any of the steps above?  If so, call me to schedule your free consultation – 913.693.7918.

John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm specializing in helping families and couples who are not yet retired realize their financial goals.  For more information, visit https://www.chladekwealth.com.

All written content on this site is for information purposes only.  Opinions expressed herein are solely those of John P. Chladek, MBA, CFP®, President, Chladek Wealth Management, LLC.  Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness.  All information and ideas should be discussed in detail with your individual advisor prior to implementation.  Investment Advisory services are offered by Chladek Wealth Management, LLC, a registered investment advisory firm in the State of Kansas.  The presence of this web site on the Internet shall in no direct or indirect way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any state other than the State of Kansas or where otherwise legally permitted.