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Financial Education

Nine Important Documents to Create This Year to Protect Yourself and Your Money

Learn the most important documents to create (or review and adjust), and where to store them.

A Living Will and Healthcare Power of Attorney, two of nine important documents to protect your financial goals.
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This January, arguably the most impactful New Year’s resolution you can make is organizing your financial life. It will help you make smart choices all year long to keep your financial goals on track. Part of fulfilling this resolution is creating nine important documents that protect you and/or your money.

And if you already have these documents? A new year is the perfect time to review and adjust them to account for things like changes in your employment or marital status.

1. Monthly Budget

A new year calls for a new budget because this living document helps you make the most of every dollar you earn. To build a budget, you need to know how much you earn and where you spend your income in the average month. This will tell you if you’re living within or beyond your means.

Then, you can decide how much of your income actually should be allocated to necessary expenses (e.g., your mortgage), discretionary items (e.g., entertainment) and financial goals (e.g., building an emergency fund for a rainy day). Budget rules can help you formalize these allocations.

2. Home Inventory

A home inventory, which is a list of all your physical possessions, is almost as important as a monthly budget. In the event something you own is stolen, vandalized or damaged, having a home inventory will make it much easier to file the necessary police report and/or homeowners or renters insurance claim. This inventory typically includes the following pieces of information for each item or category of items:

  • Description in written and/or photographic form
  • Quantity (e.g., “one tailor-made and five off-the-rack business suits”)
  • Value, which is best documented with a purchase receipt or an appraisal, such as in the case of fine jewelry or antiques
  • Serial numbers for appliances and electronics


3. Financial Inventory

It’s also smart to maintain a list of all your financial accounts for good recordkeeping. This list should include the following account types:

  • Banking: Checking, savings and CD or term accounts
  • Investments: Brokerage, 401(k)s, IRAs and annuity accounts
  • Insurance: Life, disability and other policies
  • Credit: Mortgage, home equity lines of credit, credit cards, and auto, student and personal loans

For each one, include the name and contact information of the financial institution along with your account number and current balance.

4. Net Worth

Your net worth is the difference between what you own and what you owe, and it’s another key indicator of your overall financial well-being. Once you have a financial inventory, it’s easy to calculate and document your net worth as follows:

  • Add up all your assets, such as the current balances in your banking and investment accounts and the value of any property you own, such as your home.
  • Add up the current balances of all your debts, such as your mortgage and credit cards.
  • Subtract your total debts from your total assets to get your net worth.

5. 6. 7. and 8. Estate-Planning Essentials

As difficult as it is to think about your own mortality, it’s an important exercise for ensuring your legacy and protecting your loved ones in case something happens to you. That’s why you need to have these four estate planning documents in place:

  • Last Will and Testament: It states how and to whom you want your assets distributed upon your death. If you don’t have a valid will at the time of your death, you’re considered intestate, which lets court authorities distribute your assets based on your state’s probate laws.
  • Healthcare Power of Attorney: It identifies a healthcare proxy and grants that person the authority to make medical decisions for you in the event you’re incapacitated and unable to communicate your wishes yourself.
  • Living Will: To help your doctors and healthcare proxy know your wishes, it outlines your medical preferences in situations like these:
    • Breathing assistance if your lungs can’t function on their own
    • Supplemental feeding if you can’t take food and liquids orally
    • Medications and treatments to sustain your life
    • Palliative care to manage end-of-life pain
    • After-death decisions about organ donations, autopsies and cremation or burial
  • Durable Financial Power of Attorney: It identifies a person who will be authorized to make financial decisions and handle financials tasks, such as depositing money into your accounts or paying your bills, in the event you’re incapacitated.

These estate planning documents all have legal implications, so you should enlist an attorney to create them. This will ensure they’re valid per your state’s laws. Legal insurance can help cover all or part of the cost of attorney fees.

9. Tax Return

While you’re creating the rest of these documents, don’t forget to prepare and file the one that’s due in mid-April—your federal income tax return, along with your state return.

Protecting Your Documents

Once created, store all of these documents in a safe place. For physical copies, consider buying a fireproof safe. For electronic copies, you’re best bet is a password-protected, encrypted environment, such as a secure cloud storage site.

Editor’s note: Quorum is not affiliated with any of the companies mentioned in this article and derives no benefit from these businesses for placement in this article.

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CUNA 2023 diamond award trophy icon

CUNA 2023 Diamond Award Winner

Financial Education

Quorum derives no benefit from businesses in return for placement in this blog.

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