My wife and I talk about finances every week. More specifically, we discuss the amount of discretionary funds we have available, and then decide together how we are going to spend the money. We also do an overall budget review periodically, but she leaves the handling of paying the day to day bills to me. This fact recently led her to a startling revelation; she actually doesn’t have adequate knowledge to handle the family finances if something should happen to me.
She asked me to build her an outline of what she would need to know. Realizing her request was a great idea, I opened my laptop and created a document that contained every detail of our finances. Here is a list of what I came up with.
Work Contact
If something happened to me, she would have to contact my employer to inform them of what had happened. I listed my manager’s name and phone number. He could also connect her with the right people to talk to regarding my retirement accounts with my employer.
Life Insurance Contact
In the event that I should die, she would need to know how to contact our life insurance agent to get the gears in motion to cash in on my life insurance policies. This would be critical to ensuring she has the funds to continue to support herself and our children.
Financial Advisor
After receiving the funds from the life insurance policies, my wife would need someone to help her build a solid financial plan. She would have to think about not only supporting our family in the present, but also through retirement. Our life insurance agent doubles as our financial advisor, but that may not be the case for everyone.
David’s Note: Travis should seriously consider another person other than his life insurance agent as their family’s financial advisor, as there are just too many conflicts of interest for an insurance agent to do a good job managing someone else’s finances. He should also do his best to educate his wife on the beauty of low costs investing so she can find a low cost advisor that values the benefits of passive investing.
Monthly Expenses
Each month I create a financial worksheet that lists our reoccurring monthly expenses, their amount, and the due date. I included the current month’s worksheet in the document as an example as to what our bills currently look like. This information would help her ensure all bills are paid on time.
Lines of Credit
I also listed every loan and line of credit we have, their account numbers, and creditor contact information. This information includes our mortgage, our car loan, credit cards (whether they have balances or not), and other lines of credit we have through our bank. She would have to contact each of them to inform them if I passed away.
Online Accounts and Passwords
Every line of credit and reoccurring monthly expense has an online portal for which we have a user ID and password. She will need to know these if she ever wants to check on the accounts or make payments online.
Retirement Account Information
I included current balance information for both the pension and 401k I have through my employer. She would have to work with my employer regarding how to handle those accounts if I passed away, but the inclusion of the information at least gives us an idea of how much we currently have in those accounts.
Satisfied with how the document turned out, the next logical question was what we would do with the document. We came up with a three step process:
Update Monthly: This document is simply a snapshot in time, and will need to be updated as time passes. We agreed that as part of our first budget review of the month we will update and go through the document together. By making small, frequent updates to the details we will ensure that the information is always up to date. By reviewing it each month together my wife will be extremely familiar with our overall financial state too.
Back It Up: The document would be kept on our laptop, but it would also be backed up on a USB key flash drive.
Keep It Secure: The USB key flash drive would be stored in our fireproof safe along with our other important documents.
