The stupendously tragic events we've seen unfold in Japan might have you glued to your TV. As people evacuate from their homes, they aren’t carrying anything with them. They have no pictures, financial documents, or laptops. They’re happy just to be alive.
But eventually these people are going to need to rebuild their homes and lives, most likely without any of their financial records. Clearly, nobody could foresee or adequately prepare for what has happened over the last few weeks. But along with the more important life lessons, this devastation brings home the importance of having your financial records available and accessible no matter what. Here’s how to set up your financial life in case disaster strikes your family.
1. Know what you need. Here’s a list of important documents you need to have available.
- Investment statements
- Bank statements
- Credit card statements
- Your living trust or will
- Income statement
- Balance sheet
- Property tax statements
- Mortgage and HELCO statements
- Last 2 years tax returns
- Last 3 years monthly budget tracking
- Retirement account statements and list of who your IRA beneficiaries are
- Records proving you own assets or have money owed to you
- Records proving you’ve paid off debts
- Term life insurance, whole life insurance, and liability insurance policies or statements
2. Put these records together. Assemble all your financial records in one notebook for easy access. You can discard old records as new documentation comes in. For example, if you are keeping your last two years of tax returns, you’d destroy the return for 2008 as soon as you have your 2010 return available. In the spring of 2012, you can destroy the 2009 return and keep 2010 and 2011. Update all your financial records this way. Simply keep the new statement on file and destroy the oldest record you are keeping.
[Visit the U.S. News Retirement site for more planning ideas and advice.]
3. Scan. If you don’t have a scanner, you should save up and buy a good one as soon as possible. It will save you tons of storage space and a huge amount of time when you need to access your financial information. Feed your entire notebook into the scanner and have it safely scan your documents in a manner of minutes.
4. Secure it. When you scan your documents, you’ll probably scan them to a pdf file. When you do so, you can password protect each document. This is a must.
5. Copy and distribute. Make a copy of this data and get it encrypted and password protected. Then, send it to a relative in a distant location. The farther away your relative lives, the less likely you both are to be impacted by the same natural disaster. In addition, you can pay a service to store your records online.
Nobody knows when disaster might strike their family. Copying and protecting your financial information will make it easier to rebuild your life in the aftermath.
Neal Frankle is a certified financial planner and runs Wealth Pilgrim, a personal finance blog that helps people make smart decisions about their money. As a start, he suggests that you strive to understand your credit score range.