When I was a teen, my uncle suddenly and unexpectedly passed away. He had meticulously taken care of the finances for his family and left my aunt with a solid financial foundation. This didn’t take away the pain of his being gone, but his preparation eliminated additional stress in my aunt’s time of grieving. Today, she is still reaping from what my uncle sowed by having his finances in order.
My uncle’s premature death left a lasting impression on me. I decided to do everything I could to create a system of organization that would help my wife if I were to die before she does. The result is a tool I call the “FLOP” (which does not mean it doesn’t work).
The FLOP stands for “Financial Life on One Page,” and it’s a single file or location for all your financial account details. As I have added to it over the past few years, it has become a useful tool for me in the here and now, too.
A personal FLOP creates a central location for your pertinent financial information. It serves three main purposes:
1. It is a balance sheet.
A balance sheet can be a great source of encouragement because it takes into account any debt you have been paying off, plus all of your good financial decisions. Increasing your savings, paying down debt, and making wise purchases all affect your balance sheet in a positive way.
To create a balance sheet, gather all your account information and put your assets and liabilities on a spreadsheet. Then do the simple subtraction: Assets – Liabilities = Net Worth. Your net worth should always be growing. If it’s getting smaller, re-evaluate how you are earning and spending and make adjustments.
2. It organizes login information.
Add columns for your login and password for each account. Consider using a password hint rather than the actual password. I turn to my FLOP at least once a week to figure out a login I forgot.
3. It is a financial roadmap.
A FLOP provides a grid of all of your personal financial details – from banking to insurance policies – if your family ever needs them. It should contain the name, phone number or web address of each institution, account numbers and any other pertinent information that may be needed. Backup your FLOP regularly and keep it in a safe place. Update it at least annually.
Having a roadmap prepared in advance is a great way to help eliminate unnecessary stress in a time of loss.
Adapted from www.christianpersonalfinance.com.