How (and why) to create a financial plan

A few weeks ago, I celebrated another birthday. For whatever reason, birthdays always make me think about how many more birthdays I have to celebrate. And eventually, I think about how my husband would handle the finances in the event of my death.

Happy birthday, huh?

Although I am unlikely to die anytime soon, you never know. When thinking about my earthly exit, I am bothered most by the practical things that would affect my family. In the middle of grief and loss, I don't want my husband to be struggling to know which bills are on autopay, how much we contribute to our IRAs each month, or what the passwords are to important accounts. So, in my opinion, the most loving thing I could do is make sure he can keep our family's financial life together. It's time to create a Financial Plan.

A financial plan

I drew inspiration for this plan from, of all places, my job. My program is required to have something called a “Master Plan,” a manual that covers all the policies, tasks, and projects associated with the program. If I became incapacitated on Friday, someone could figure out how to keep the program running on Monday.

Something like that is necessary (and required) for good reason: At work, I'm the only one who knows how to do some things. I'm also the one in our marriage who does everything with our finances.

But it's more than just my husband now. By the time you read this article, if all goes as planned, we will have custody of our (almost) adopted children in their country.

Adding children to our family changes everything. Last year, a family in our community lost both parents in a car accident. I talked to the oldest daughter, and she told me how her parents had been very open with her about their finances. I don't know if their plan was as extensive as this, but they communicated their income and debts.

As I have watched this family grieve the loss of both parents, I want to do everything I can to make it easier for someone else to step in and take care of our children's medical and financial needs if the worst would happen.

Creating the plan

I first learned about Erik Dewey's free Big Book of Everything from an old GRS post. His planner is full of information, more than I needed. But I pulled what I wanted from his plan and from doing other research as well.

  1. Personal information. The first section in our plan has a list of our names, Social Security numbers, contact information, and dates of birth.
  2. Address and previous addresses. Along with your address, include your most recent address or two and how long you've lived at each place.
  3. Employment history. List current and previous jobs, as well as employment dates. Include contact information for the HR department at your current job.
  4. Medical information. For each member of your family, include medical histories, surgeries, hospitalizations, prescriptions, and allergies. Extended family medical history is also important. Contact information for physicians, specialists, eye doctors, and dentists is also crucial.
  5. Usernames and passwords. Include a list of log-in information to all the necessary online accounts. Facebook, Linked In, online photo albums, bank accounts, credit cards, frequent flier information, and email are all examples of accounts that would be useful.
  6. Bank accounts. Keep a list of all bank accounts (checking, savings, etc.) along with contact information for each bank.
  7. Automatic payments. List all automatic payments, from which account, how much, when, and to whom.
  8. Retirement/investments accounts. Don't forget pension plans, 401(k)s, IRAs, and any other investment accounts. Include the balances and beneficiaries.
  9. Insurance policies. For health, disability, life, car, and home/renters insurance information, list the company/agent contact information, premium costs, beneficiary information, deductibles, policy holder names, and amount of benefit, if applicable.
  10. Real estate. Document all real estate values, mortgage holders, real estate tax information, and mortgage company contact information. This is also a good place to list major home improvements and who you've used for home and appliance repairs.
  11. Credit cards. Don't forget credit cards. The balance, interest rate, issuing bank, log-in information, as well as rewards, if applicable.
  12. Tax records. Explain how prior years' tax records can be accessed as well as your tax preparer's contact information.
  13. Lawyer. Who is your lawyer? Where is your will?
  14. Debt obligations. List all debts, including amount owed, interest rates, and payoff dates.
  15. Who owes you. If anyone owes you money, include amount owed, interest rates, payment schedule, and payoff date.
  16. Important contacts in case of death.These companies are probably found elsewhere in this plan, but the Social Security Administration, credit card companies, insurance companies, and the employer benefit department all need to be notified.
  17. Inventory of valuables. Do you store any valuables in a storage unit? Safe? Safety deposit box? Don't forget to list cars, boats, RVs, and motorcycles (include make, model, VIN, etc.). My sister will be the executor of our estate if both my husband and I die. This section will also include a list of who we want to get our stuff.
  18. Data backup plans. Where is your data backed up? In a paper file? Dropbox?
  19. Funeral costs. If you have requests for your final burial, you can list them here. Include the company in charge of arrangements.
  20. Personal letters. My father, as I've mentioned before, died at a young age. He wrote each of his kids a letter that was given to us the day after he died. It continues to be one of my most treasured possessions, something I want to give to my husband and children as well.

Creating a plan like this requires a lot of work upfront. Maybe you can take a financial health day to complete this. Once the initial work is done, it will be easy to update it. I update my Master Plan at work about once per year, and it takes just an hour or so. I will do the same with our Financial Plan, adding information or updating bank account balances.

The end result of a Financial Plan

One of the best reader stories I've read was a story of a woman whose father prepared her amazingly well for his death. Throughout the post, she explained how he introduced her to various key financial people while he was still living.

My husband and I don't communicate as well on financial matters as I'd like. Our system works: I organize the financial stuff and give him a financial report every now and then. Having a Financial Plan in place could help facilitate conversation while I'm living — and give my family peace of mind when I'm no longer here.

More about...Planning

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Jenny @ Frugal Guru Guide
Jenny @ Frugal Guru Guide
7 years ago

Good point. I don’t even think my husband knows the name of our current mortgage holder, much less the account password, even though I told him a rather long story about our note being sold again. I really should do this!

Clara
Clara
7 years ago

This is such a good and timely reminder. I copied the list of things to compile and put it into my financial onenote notebook on my computer. As I compile everything, I will print it up and show my kids where it is. Especially as a single mom now, I want to do everything possible to help my kids if something happens to me. Life insurance, disability insurance, money in the bank, and now I will create this financial plan. Thank you.

Matt Becker
Matt Becker
7 years ago

This is a really important post. Something I think my wife and I have done a good job of is making sure that we have financial protection for almost any circumstance. But I’ve done a terrible job of documenting everything. This is a great reminder that the worst could happen at any time, and putting this work off is leaving my family in jeopardy. I doubt I could accomplish the full documentation in a day, but biting off little pieces at a time is a very worthwhile activity.

Thanks for the reminder and for the helpful list.

MovingOakland
MovingOakland
7 years ago

My widowed Mother went for a walk with her dog one morning and suddenly met her maker. No one saw it coming – this woman was the envy of all who knew her in terms of health and vigor. Oc course, it happens – all the time. It was a huge shock for her six children, but not a financial planning burden because she did all of the things you state above and updated us each year (actually sent a copy to each of her children). In fact, going back to the 70’s, both my parents held a 15 minute… Read more »

Alex C
Alex C
7 years ago

Awesome. I have a financial plan that gives me all the information of when debt would be paid off, how much money I have, and make. The best part of the financial plan gives me a number that is called a Financial Independent Number. This number tells me how much money I am going to need at a certain age if I wanted to retire and never work in my life. Then it tells me how much money I need to put away a month. This number is so important. How many people do you think know their Financial Indepdence… Read more »

AMINAH
AMINAH
5 years ago
Reply to  Alex C

could you kindly share you plan with me.
would be very grateful because i have very poor saving culture

Mom of five
Mom of five
7 years ago

You know, I never thought about both of us dying. Because I handle our finances, I did do a Word Document for my husband with accounts and passwords in case I die. It needs to be updated (I’m sure some passwords have changed). But we really should do something if both of us die – especially the kids’ Social Security #’s and medical data, backup data from the computer, and a few other things here I had never considered.

Thanks for the great article Lisa. Congratulations on your new additions! Here’s wishing you all as smooth a transition as possible.

Beth
Beth
7 years ago

Excellent post! After all, why shouldn’t you share the info with a spouse or partner? I would make an addition to your post: Get a list of trusted vendors who do work on your home, as well as a guide to regular home maintenance. My husand sort of took over this task early on in our marriage, so for me, it is important to know where the furnace guy’s contact info is, and when and how often we should clean our filters, etc. If my husband dropped dead right now (heaven forbid), I don’t want to scramble to find that… Read more »

Laura
Laura
7 years ago

This sounds like a really great idea, but I have a question: where do you store this information to keep it secure but also accessible to the partner?

M
M
7 years ago
Reply to  Lisa Aberle

My parents have a copy of our will and living trust. We also have a copy in our safe, and in the plastic baggie in our chest freezer (in case of a fire).

Marsha
Marsha
7 years ago
Reply to  Lisa Aberle

You’ve got to consider that the person needing the information is likely to be in a highly distraught state. It should be instantly accessible (no safety deposit box) and they shouldn’t need a key, a password, or a code to read it. Most people who break into homes are looking for something easy to sell for drug money, not trying to get personal info to steal your identity. Of course, don’t tape it to the bottom of your keyboard or put a neon sign on it saying “important financial information.” I think a plain folder among other books or folders… Read more »

Elizabeth
Elizabeth
7 years ago
Reply to  Marsha

Having been through a couple of deaths in the family in recent years, we’ve learned that there is certain info you need right away and some stuff that can wait. For instance, you need to know who is power of attorney, where the will is and who the executor is, how to access money to pay bills, where the valuables are so you can keep them safe. (Knowing that empty homes are tempting for criminals!) And insurance policies, etc. Other than that, it’s going to take months to settle your estate. Chances are your family isn’t going to run out… Read more »

T
T
7 years ago
Reply to  Lisa Aberle

This could be a horrible idea, but I’ve thought of making a document like this with passwords written out in “code.” Most of my passwords are a combination of names/ numbers of some relevance to my life (great aunts’ zip codes and such – no DOB or anything too obvious), so my parents would know what I mean if I say my facebook password is the name of my summer camp + Jo’s zip, but someone breaking into their home would likely not have this information. Thoughts?

Beth
Beth
7 years ago
Reply to  T

I like this idea, but I can see where it would backfire. I can barely remember all of *my* passwords, let alone things like “Now, which zip code of our great aunt’s did my sister use – great aunt’s year-round home, her summer home, or her nursing home?!?”

Maybe you could write out the usernames on one sheet of paper (perhaps set it up in Excel), then print out a second sheet with the corresponding passwords. Then, keep sheet one in, say, a dresser drawer, and sheet two somewhere else.

Joe
Joe
7 years ago
Reply to  T

I think this is a good idea. An addition to this could be “rules” for passwords (kept somewhere else)like “in all number series first number is typed with shift held down so it is a character” and “all word or letter series have the third letter capitalized” Which will also make your passwords themselves more secure. Great post and good replies!

Elizabeth
Elizabeth
7 years ago
Reply to  T

I can see this being a problem for me because I change passwords so frequently. Still I would like someone to shut down my email, social media, etc. if something happens to me.

Phoebe@allyouneedisenough
7 years ago

We are thinking of having kids in the near future, and this is top of my mind as well. Thanks so much for the comprehensive list – very helpful.

Becca
Becca
7 years ago

I have thought about this quite a bit in the past, but I always wonder where to keep this information. Do you keep your usernames and passwords together? What if something happens to your computer or someone steals the binder in which you keep all of the information?

J
J
7 years ago

But how do you keep this document safe? What happens when it gets stolen (either electronically or physically)?

I think it’s a great idea, but all I keep thinking is how easy it’d be to take my wife and I for all we’re worth with just one little document.

Courtney @ FamilyGoneHealthy
Courtney @ FamilyGoneHealthy
7 years ago

I really need to sit down and do this. We have young kids, too. Also, my husband doesn’t deal as much with the finances and doesn’t remember all of our different accounts and our insurance policies, etc.

John S @ Frugal Rules
John S @ Frugal Rules
7 years ago

Great post! None of us know our time, which is why doing this is so vital…especially if you’re married and have a family. My wife and I did much of this several years ago when we had our wills done and there are a few other things we need to add to make it more complete.

Babs
Babs
7 years ago

Great post Lisa! This is something I need to work on. Actually should have done it 20 Years ago. Thanks for the link. I heard about another site on NPR

http://getyourshittogether.org/

She unfortunately figured it out after her husband was killed in an accident.

Congratulations on your new family members!

Ivy
Ivy
7 years ago

I have a couple of pages with passwords, assets, etc – and since I travel often I remind my husband before I leave where they are. It’s a must have since I manage all financials. I am not particularly concerned about safety – finding a sheet of this information in a whole house is a big exercise and I fully expect if thieves come in they will head for electronics, safes and such, rather than browsing through the paperwork. We have set up a trust for the kids, so a list of assets and contacts sits with the executor, just… Read more »

Jake
Jake
7 years ago

These are all great things to know and have in one place. I know if my wife or I passed away the other one would have a difficult time finding all of this important information. I’ve never thought of putting all of it together in one, easy to read, document but after reading this article I know we should. We’ll put that on our “to-do” list for a rainy day. Thanks for the list!

Holly@ClubThrifty
7 years ago

Great post.
My job in the funeral industry has taught me how incredibly helpful it is to have important information gathered in one place.
I have seen so many families go through a bunch of unneeded stress when their loved one passes….simply because they cannot locate life insurance policies or other important information.

Kati
Kati
7 years ago

This is a great idea. I’ve heard about the Master Plan before but never took action. It’s definitely something I should get organised for peace of mind for both my partner and I. Thanks for providing a list, it’ll make it easier to get all the info in the one place.

LeRainDrop
LeRainDrop
7 years ago

Lisa, thank you so much for this helpful post/list. I am a single person, and there is NO ONE else who currently has access to any of this essential information (other than my current address!). I am a pretty organized person, so I hope to be able to pull all of this information together over a couple weekends. Again, thank you so much, and I hope you are hugging your kids right now!

John
John
7 years ago

Be Careful! First of all, a financial plan is a great idea and everyone should have one. However, as someone who works with digital security I want to caution you against ever having your passwords and usernames in the same place and certainly not on a digital document. You want to store this in a safe place, and if it contains a lifetime worth of financial records and private information that should be one very very safe place. You should consider making two lists for the critical information. One that describes everything and one that has the critical information. For… Read more »

Martha
Martha
7 years ago

This is incredibly timely for me too. I just left the lawyers office after signing a revocable trust and will. Now my job is to move all my assets into the trust. As I do that I’m creating the list you mentioned. I will add the other things too.
BTW – I took my first Financial Work Day back in March to finally get my act together and work on my will. It is now signed!

GlorifiedPlumber
GlorifiedPlumber
7 years ago

What a refreshingly complete list of information that needs to be readily available to anyone dealing with stuff in the event of your death! Kudos! One of them (Item 18, Data Backup), made me think of a conversation I had regarding such an event. A married couple (and long time friends I trust explicitly) serve as the executors of my estate as I currently have no dependents or wife. When they were visiting me in Portland, we got into a beer fueled discussion (easy to do in PDX) about what info they would actually need to effectively serve as executors.… Read more »

Windy
Windy
7 years ago

My husband’s birthday is on Saturday. Guess what we’ll be doing on Sunday?

Crystal
Crystal
7 years ago

Congrats on the adoptions!!! I made a document like this a couple of years ago for my husband and it’s in my in-laws floor safe. I need to update it now…

Mike@WeOnlyDoThisOnce
7 years ago

Always great to plan, but be careful of where you store the information–a treasure trove for identify thieves.

J P
J P
7 years ago

Great information. I agree to take every precaution possible to protect your personal information. However, it makes it so much easier to have everything all organized in one place both for you and family members (depending on the situation).

Good list!

Renee L.
Renee L.
7 years ago

Nice Post!

Based on my experience the most important aspects of creating your personal financial plan are identifying your season of life and risk temperament, determining your ideal asset allocation, applying our model portfolios, and so on.

Elizabeth
Elizabeth
7 years ago

I really need to do this 🙂 Thanks for the great info! I do plan to keep the information in my safety deposit box. Yes, I realize that’s a barrier — but in my experience people don’t need all of your information right away. It takes months to get everything settled even when you have all you need. People need some information right away — your will or your living will, organ donation, bank accounts, etc. Some things like when the furnace filter needs changing and how to shut down your email aren’t going to be top of mind the… Read more »

Camp System
Camp System
7 years ago

I think that you were right on with this article. Lisa I hope you keep writing more blogs like this one. I appreciate you sharing this with the rest of us Lisa.

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