Welcome to our two-part series on how to take inventory of your finances! This year, we made it a priority to sit down and get clear about our financial goals. It's been a transformative process, all thanks to the work we've been doing at the bank. Our journey began with a mastermind class, "Smart Women Finish Rich," designed to empower women to take control of their finances. 

Money is something we think about daily, yet do we truly know where our money resides? Do we understand our net worth? These questions led us to the crucial step of conducting a financial inventory. 

The Importance of Finding Your Stuff 

The first step to financial housekeeping is simply finding your stuff. It might seem straightforward, but it's surprising how many of us are unaware of the accounts we hold. So, let's make use of this new year energy and gather all our financial documents in one spot. The best way to do this is to create a filing system to hold all your important documents in one place. This filing system will include a file cabinet, 12 legal sized hanging folders, and 25 legal sized manilla folders.  If you don’t have a set of files on hand, make a trip to your local office supplies store and purchase yourself a set of legal hanging files and a box of legal manilla files. If you don’t have a filing cabinet, go ahead and purchase one of those too. It doesn’t have to be an expensive one, a simple file box will do. We purchased these on amazon, and they seem to do the trick.  

Documenting Your Financial Landscape 

1. Tax Returns 

Let's talk "Tax Returns!" This folder holds the last seven years of your financial history. Tax returns? They're what we send to Uncle Sam, detailing our income and taxes. 

Keep them safe for 3 to 7 years—insurance against IRS audits! For claims or deductions, hang on to them for a full seven years. 

Now, organize that "Tax Returns" folder! Seven labeled manilla file folders, one for each year. Put a copy of your tax return for each year in its folder. These past returns are your guide for next year's taxes, making reporting easy. 

If the IRS ever calls for an audit or questions, having these returns on hand is like having a financial safety net. 

2. Retirement Accounts 

Create a hanging file and label it "Retirement Accounts." Maintain separate folders for each of your accounts, whether it's a 401(k), IRA, or other retirement account type. When documenting your financial landscape, your "Retirement Accounts" folder should contain essential information and documents related to all of your retirement savings and investment accounts. Inside each account folder you should include the following:  

• Include the most recent statements. This will show your account balance, contributions, and investment allocations. 

• Documentation of contributions made to each retirement account during the tax year. Keep records of any catch-up contributions, especially if you're over 50 and eligible for additional contributions. For IRAs, keep track of contributions to ensure you stay within annual limits. 

• Copies of your beneficiary designation forms for each retirement account. These forms determine who will receive the funds in your account upon your passing. Ensure these forms are up to date, especially after major life events like marriage, divorce, birth of children, or the passing of a loved one. 

• Information on how your retirement funds are allocated across different investments (stocks, bonds, mutual funds, etc.). Include any recent changes you've made to your investment strategy or asset allocation. 

• Copies of the Summary Plan Descriptions (SPDs) for employer-sponsored plans. Keep details of the plan rules, including vesting schedules, loan provisions (if applicable), and any other plan-specific features. You’ll also want to keep copies of the plan's annual reports or any communications from the plan administrator. 

• Contact details for the plan administrators or financial institutions managing your retirement accounts. You’ll want to list names and numbers of financial advisors or professionals you work with for retirement planning. 

• Online account access details. Keep your usernames, passwords, and security questions for online access to your retirement account portals so you have easy access to them. 

11. Children's Accounts 

If you have children, maintain a folder for their accounts, including 529 plans, savings accounts, and any financial assets in their name. 

12. Financial Inventory Planner 

Lastly, create a folder for your "Financial Inventory Planner." This will house a worksheet we'll create together in the next episode, detailing your net worth and financial overview. 

Now that you've got everything neatly documented, here are some tips to keep it organized and up to date: 

• Regular Updates: Set a schedule to review and update your Financial Inventory Planner. Whether it's monthly, quarterly, or annually, consistency is key. 

• File Organization: Keep physical copies of important documents in labeled folders. Each folder should correspond to the categories in your planner. 

• Digital Backup: Scan and store digital copies of all documents in a secure, cloud-based system. This ensures you have access to your information from anywhere. 

• Password Management: Use a secure password manager to store login details for financial accounts. This adds an extra layer of security. 

• Emergency Access: Ensure a trusted family member or friend knows how to access your planner in case of an emergency. 

• Review with a Professional: Periodically review your planner with a financial advisor or planner. They can offer insights, identify areas of improvement, and help you stay on track with your goals. 

Celebrate Your Financial Clarity 

Documenting your financial landscape is a significant achievement. It's the foundation upon which you'll build your financial future. So, take a moment to celebrate this step towards empowerment and control. You've armed yourself with knowledge, and that's a powerful tool in achieving your financial dreams. Now, let's move forward with confidence!