Test Your Financial Resilience

There’s more to being financially resilient than simply saving money for a rainy day. Part of being financially responsible is maintaining good financial records—and making sure people who need access to your records know where to find them if something happens to you. 

Here are some ideas to help you become more financially prepared.

Communicating your goals

Too many families spend little to no time talking about money, and this habit lowers the financial literacy of everyone in the household. Do you know each family member’s money goals? 

Talking about money—more than what bill is due when—will strengthen everyone’s financial resilience. You may want to set family goals as well as encourage everyone to set individual financial goals. This may or may not include preparing a budget and agreeing on plans, including a savings plan, a debt reduction plan, and others.     

Systems and lists

Do you use an accounting system to store your financial records? Or do you have Excel worksheets? Is it clear where they are located on your computer? Do your loved ones know how to find these items if something happens to you?  

Now that so many things are digitized, it’s not as easy as it has been in the past. You can’t just label a filing cabinet drawer and say everything in it is important. Your financial records might be in a hundred different places on your computer. Being organized and planning for a smooth financial future for your loved ones means making a list of instructions on how to access your financially-related digital assets.   

Your list might include:

1. URL, login, and password to your accounting systems 
2. List of bank, brokerage, and retirement accounts and their logins
3. List of credit card accounts and their logins
4. List of government-related accounts, such as social security and irs.gov, and their logins
5. List of regular monthly bills, such as utility, credit cards, and rent, and their logins
6. Details of regular monthly income received
7. Where to find financial files on your computer, such as tax returns, bank statements, and real estate closing documents (to name a few) and how to access them 

And that’s just a start. You may not want to share your passwords with certain family members. If this is the case, you can still record your instructions and store them away for safekeeping, providing access information later.  

Backups

If your computer crashes, will you be able to recover your financial files? Taking periodic backups will prevent a loss of records.  

What to keep in case of an audit

You hope it will never happen, but if it does, are you prepared for an audit with the IRS or a state agency? Do you know what records to keep and how long you should keep them?   

Financial confidence

Having good documentation, sharing financial knowledge and goals, and making a backup plan will boost your financial confidence. You will be more prepared than most households when it comes to financial safety.    

How financially resilient do you feel? Considering the ideas above will help you stay one step ahead.