Financial Inventory for Couples

Transcription

1 Financial Inventry fr Cuples Step 1: Gather Yur Dcuments Take a mment t start gathering all the dcuments, accunts, and tls yu currently use. If yu have never dne this befre, it may take sme time. These dcuments are part f yur inventry. As a cuple, yu want t build a jint inventry that yu wn tgether. Prir year taxes Paystubs and annual salary Credit card statements + lgin infrmatin Credit scre Bank accunts + lgin infrmatin Trust funds and inheritance Prperty Cars Prperty Real Estate Educatin debt + lgin infrmatin Car lan + lgin infrmatin Mrtgage Rent + lease Persnal lan Budget + nline lgin (f yu use ne) Retirement accunts (such as IRA r 401k) + lgin infrmatin Stcks, bnds, and brkerage accunts + lgin infrmatin Health Insurance + lgin infrmatin Tax-free savings accunts, such as FSA and HAS + lgin infrmatin Emplyer benefit infrmatin, such as cmmuter benefits, amunt f sick/vacatin/pto accrued Tip: Start scanning dcuments and saving nline. Keep a filing system by categry. Example: Categry Sub-Categry Example f Sub-Categry Tax Year 2010, 2011, 2012, etc. Retirement Type IRA, Stcks, 401K Prperty Type Car Lease/Title, Mrtgage As a cuple, yu want t build a jint financial dcument inventry that yu wn tgether. pg. 1 Financial Inventry Fr Cuples Value and Invest

2 Step 2: Review Yur Dcuments The mst imprtant part f this step is taking a neutral and nn-judgmental stance. There is time fr discussin in later steps. It may take sme emtinal energy t stay interested and calm. If yu fcus n understanding, it is easier t listen penly. Fcus n asking yur partner clarifying questins. Here are sme examples: D yu prepare yur wn taxes? D yu use a budget? Hw stable d yu think yur jb is? If yu fcus n understanding, it is easier t listen penly. pg. 2 Financial Inventry Fr Cuples Value and Invest

3 Step 3: Discuss Financial Styles and Knw-Hw A financial style reflects the day-t-day apprach and attitude that smene takes t their finances. It des nt always match smene s persnality, but they are ften related. Yur financial knw-hw is hw savvy yu are in understanding mney management. Financial knw-hw is partly related t yur understanding f financial vehicles, such as lines f credit and investing, but fr the purpses f this cnversatin, it is mre related t hw cmfrtable yu are cmparing yur incme, expense, and lng-term gals. Mst cuples, particularly thse under age 30, d nt have extensive financial experience. Yur gal is nt t typecast yur partner. Mney and attitudes tward mney are cmplex. Instead, yu want t understand general aspects f each persn s style and knw-hw. Behavir and attitude is mre valuable than labels. Behavir and attitude can change, and ften will. Labels dn t reflect grwth. Rather than delve int smene s past and intentins, fcus n current behavirs. Then ask abut the past. Financial Style Hw ften d yu review yur financial statements (bank accunt, lan, credit card, etc.)? If yu d, what d yu lk fr? D yu review yur benefits annually? If s, what is imprtant t yu? D yu use a budget? Tell me abut it. D yu like knwing where every penny ges? Wuld yu like t knw where every penny ges? D yu wrry abut mney? Wuld yu prefer t be directly invlved with mney, r have smene else d mst f the management? D yu like t use pen and paper, r nline systems (nt just fr mney, but in general)? What are 2-3 things yu feel gd abut regarding mney? What are 2-3 things yu feel prly abut regarding mney? Financial Knw-Hw D yu understand incme / expense, and d yu have a system fr tracking them? D yu understand the difference between secured and unsecured debt (e.g., mrtgage, hme equity line f credit, credit card, student lan)? Have yu paid ff debt successfully/are n the path t paying ff debt? Hw did yu d that? D yu understand cmpunding interest? D yu enjy learning (in general)? D yu understand the basics f life/health insurance and yur cmpany benefits? What wuld make it easier t understand? Mney and attitudes tward mney are cmplex. Behavir and attitude is mre valuable than labels. Labels dn t reflect grwth. Behavir and attitude can change, and ften will. pg. 3 Financial Inventry Fr Cuples Value and Invest

4 Step 4: Discuss Yur Backgrunds and Attitude It is amazing hw little time we spend discussing ur family f rigin, particularly as it relates t mney. Our experiences with mney, including hw presents were purchased, ur parents financial state, whether there was cnflict arund mney, all play a fundamental rle in ur feelings abut finances. If yur parents wrried abut paying the bills, fr instance, yu may want t fcus n securing enugh incme t never have t wrry abut finances. If yur family pinched pennies, yu may want t spend mre lavishly. Did yur family fight abut mney? Did yu feel secure arund mney? What are sme things yur family did with mney that yu like (e.g., vacatin, saved fr cllege)? Were yu ever withut mney, r did yu have a very difficult time with little mney? What are yu feelings abut debt? Wuld yu like t learn mre abut financial management? D yu feel like past decisins are hlding yu back? What are yur feelings n giving? When yu think abut the future, what wuld yu like t d in 5 years? 20 years? 30 years? Wuld yu like t fcus n simple living? If yu culd stp wrking tday, what wuld yu d? Wuld yu ever want t pen yur wn business? D yu feel that wning a hme is imprtant? Hw d yu feel mney needs t be handled in a family, particularly in raising children? D yu believe yu need t prvide fr family members in the future r nw? Hw s? It is amazing hw little time we spend discussing ur family f rigin, particularly as it relates t mney. Our experiences with mney... all play a fundamental rle in ur feelings abut finances. pg. 4 Financial Inventry Fr Cuples Value and Invest

5 Step 5: Discuss What Yu Can Systematize and Cnslidate The mst imprtant aspect f financial management is having a system t track and review finances tgether. Unfrtunately, many cuples leave this piece ut, and then wnder why they aren t in-sync with ne anther. A system is a manner f rutinely ding smething that is understd by thse invlved t achieve a particular utcme. This means, that yu need t think abut yur utcme, and then implement a system. Cnslidating simplifies the areas yu are managing, s yu fcus n thse things that matter t yu. Nt having a system yu have bth agreed n is still a system: it s just ne that is nt likely t include persnal and financial grwth. Examples f things t cnslidate: Banks and accunts Can yu cnslidate yur accunts t a single bank? Can yu ensure each persn sees everything? D yu need multiple checking and savings accunts, r culd yu use fewer? Credit cards Cnsider limiting hw many yu have t 2, with ne being a primary card, and the ther a back-up/fr specific purpse, like travel? Debt Can yu cnslidate yur educatinal lans? Benefits Take a clse lk at yur emplyer benefits, and cnsider the best way t btain insurance. Culd yu increase yur participatin in an emplyer s Examples f things t systematize: Hw and wh pays the bills? Hw and wh manages the budget? Will yu use an nline tl like Yu Need A Budget (YNAB) r Mint? What triggers a financial discussin? D yu want t give yur partner a call whenever yu plan t spend mre than $100? Hw will yu check in hw finances? Can yu schedule a mnthly r annual meeting t review finances? Hw will yu discuss unexpected financial situatins (right away, after each f yu has thught abut it)? Nt having a system yu have bth agreed n is still a system: it s just ne that is nt likely t include persnal and financial grwth. pg. 5 Financial Inventry Fr Cuples Value and Invest

6 Step 6: Discuss Managing Debt This is an intrductin t help cuple reduce and manage debt. Many ther resurces are available. The number f cuples beginning their relatinship in debt, and cuples living with high levels f debt cntinues t increase. If yu have cnsumer debt, yu are nt alne. Cnsumer debt includes a wide variety f debt. A hme mrtgage is als debt, but it is nt included in cnsumer debt. Debt is a tl, but many peple dn t use it well. The gd news is every persn and every cuple can eliminate debt, and build great mney habits. One f the mst imprtant cnversatins yu can have with yur partner is arund debt, because it is ne f the best ways t clarify yur values as a cuple. Reducing and eliminating debt is a great way t grw as a cuple. Many peple have dne it, and s can yu. 1 st Gather a list f all yur debts, and list ut the balance yu we fr each ne. Credit Card debt Student lans Car lans Medical debt Hme Equity lans 401K lans Tax debt 2 nd Lk at the interest rate n each item, and the amunt yu we n each item. There are tw methds t pay ff debt. One way is t pay ff the smallest debt, r the ne with the lwest interest rate first. The benefit t this is yu build mmentum by watching yur debt bligatins vanish. This is great fr thse wh feel verwhelmed by debt, r have nt paid ff debt in the past. The ther way is t pay ff the highest interest rate items first. The benefit t this is yu are putting yur dllar t the best use in eliminating yur verall debt-lad. This is a gd methd if yu feel yur debt is manageable. The gal is t agree n a methd as a cuple. Bth methds are useful. 3 rd Cnslidate and negtiate! Can yu cnslidate yur student lans t reduce the interest rate? Can yu call the credit card cmpany t get a lwer rate, r sme frgiveness? Feel free t take cntrl. The wrst anyne can say is n. Wrk as a team and call tgether, r break ut research and calls by the partners wh is mst cmfrtable. Ensure bth partners wrk tgether, even if ne persn is primarily respnsible fr the debt. 4 th Practice Frgiveness and Accuntability. Often ne partner brings mre debt t a relatinship, r is respnsible fr acquiring mre f the cnsumer debt. Make frgiveness a value in yur relatinship. Accuntability is part f trust. Talk abut hw yu will manage and avid debt nw and int the future, and agree that yu hld ne anther accuntable with lve and frgiveness. One f the mst imprtant cnversatins yu can have with yur partner is arund debt, because it is ne f the best ways t clarify yur values as a cuple. pg. 6 Financial Inventry Fr Cuples Value and Invest

7 Step 7: Plan t Review Yur Inventry Yu will need t take inventry many times as a cuple. Sme cuples take inventry whenever there is a large life event ccurring: jb change, children, purchasing a hme, retirement. Other cuples might take inventry nce a year, r when they meet with their financial advisr. Taking financial inventry is a healthy habit. Like any habit, yu need it mst when difficulties arise: jb lss, unexpected medical debt, etc. And, like any healthy habit, the first few times yu take inventry are the hardest. Because f this, if yu are new t financial management as a cuple, cnsider taking a financial inventry mre than ne time a year. Take a mment t plan when yu will talk next, and put it n the calendar. Take a mment t plan when yu will talk next, and put it n the calendar. pg. 7 Financial Inventry Fr Cuples Value and Invest