KEEP IT SIMPLE, FINANCIALLY SPEAKING

Posted by on Sep 16, 2011 in Estate Planning

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“THE LEGAL CORNER”

By Sam A. Moak

Keep It Simple, Financially Speaking

The information in this column is not intended as legal advice but to provide a general understanding of the law.  Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstance.

I recently completed a review of Dave Ramsey’s Financial Peace Revisited at my church. With many churches having similar programs and everyone’s focus on our Nation’s debt, I thought I would review some simple areas of personal finance.

In theory, we are all in favor of saving time, labor, and space, not to mention avoiding the stress and anxiety that can come from leading complicated and disorganized lives.  In the realm of personal finance, these are all good reasons to resolve to become more simplified and organized, but saying and doing are two different things.  It may help move the process along to break the job up into some very specific things that you can do in addition to making an overall change in attitude toward your finances.  Minutes spent doing this ahead of time could save hours and many dollars later.

Direct Deposit

You may be one of those people who like to have the check in their hands for their pay, pension, or Social Security benefits so that they can personally take it to that bank teller they have known and trusted for years.  However, arranging for a direct deposit into a bank account is safer, easier, and more convenient, and, at least by a small margin of time, it allows you to get access to your money more quickly.

Recurring Bills

If the merchant, such as a utility or insurance company, allows the practice, you can pay recurring bills with an automatic withdrawal from your checking account or with a charge to a credit card. In the case of the former, don’t forget to record the transactions in your check register.  In the same vein are online banking services that allow you to pay bills online instead of by snail mail.

Online Banking

Aside from bill paying, consider doing virtually all of your banking online, making it effectively paperless.  You can go online to handle such tasks as reviewing deposits and withdrawals, tracking balances in your accounts, transferring funds between accounts, and receiving statements.

Automatic Savings

It is simply common sense that if you set up a system in which something happens automatically rather than only when you think about it and take action, the “something” is going to occur with greater consistency.  So it is with saving for the future. Arrange with your employer or bank to put a predetermined amount of money into an account or an investment vehicle on a regular schedule.  Another bonus for this approach as an investment strategy is that over the long run, it might provide a better return than jumping in and out of the markets.

Consolidation

You might want to streamline your finances by consolidating what could be an unwieldy number of accounts and credit cards.  By doing so, you can better monitor everything, lighten the load of paperwork you receive, avoid some fees, and perhaps even obtain better deals.  If you are combining deposits at one banking institution, though, be careful not to exceed FDIC deposit insurance limits ($250,000 for each ownership category in a single institution).

Up-to-Date and Available

Even if you have been diligent about making a Will, review it periodically to make sure it still conforms to your wishes, especially if there have been any intervening major events that might prompt a change.  The same goes for any number of important financial documents, such as life insurance policies and retirement accounts identifying beneficiaries and providing directives about what happens to bank accounts and other assets if you become incapacitated.

All of the above may not matter much if nobody can find the documents, so keep them in a secure place, ideally in a central filing system.  Make sure to let your family members know where they can find your important documents.

If a Disaster Strikes

It is not a pleasant scenario to contemplate, but what if in an emergency you had to evacuate your home in moments and all of your carefully gathered and organized financial materials were left behind?  One way to prepare for this possibility is to keep copies of the important documents, or at least lists of account numbers and similar identifying information, on a secure website that you could access from any location. 

Implementing even a few of these processes can give you more peace of mind and organization in your personal finances.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C.  He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

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