Do you know what your net worth is, or how much you spend each month and on what? How about how much you can expect from Social Security – or any pension plan? What’s your investment asset allocation? Are you adequately insured? And is the information in your credit reports accurate?

Now’s the time to find the answers to these and all those other pressing financial questions. Here’s how to get started.

Get organized.  Your first task is to create a personalized financial filing system.  With your files in order you’ll be able to keep track of your money and put your hands on important records when you need them. 

Try this easy filing method: Label accordion file pockets with broad financial categories such as Retirement Plans, Loans, and Life Insurance.  Then label regular file folders with subcategories that fit your situation and file them into the accordion file pockets.

As you file your financial papers into your new system, weed out old documents such as expired insurance policies that have no possibility of claims, outdated mutual fund annual reports, and records from vehicles you no longer own. 

Once you’ve got your filing system set up, look through your records to find what important information you’re missing. For example, to estimate how much money you’ll need in retirement you’ll need information about your employer-sponsored retirement plan and an estimate of your expected Social Security retirement benefit. Likewise, make sure you have all your current investment statements, insurance policies, and loan papers.

Calculate your net worth and get a true picture of your spending. Once your information is at your fingertips, it’s easy to find out where you stand financially by creating a computerized net worth statement and a list of your income and expenses. 

Calculate your net worth by entering the current value of all your assets and liabilities into a money management software program. For your assets, include your home, vehicles, personal property, savings, investments, and retirement accounts. For your liabilities, include your mortgage, credit card balances, and any other outstanding debt.

To make a list of your income and expenses, review your recent paycheck stubs, checkbook register, and credit card statements for the past year and track your miscellaneous spending. Then enter your information into a money management software program.

Next, with your list of income and expenses create a target saving and spending plan. Include both your short- and long-term goals. Once you’ve got your plan set review it regularly and make any needed adjustments.

Double-check your basic safety nets. If you haven’t already, build an emergency fund of at least three to six months’ living expenses. Keep your emergency stash where it’s readily accessible, such as in a savings or money market account and resist the temptation to dip into it for anything but true emergencies, such as illness or unemployment.

Meanwhile, if you haven’t done so in awhile or you’ve had changes in your life, do a comprehensive insurance check-up. Review your health, disability, life, vehicle, homeowners, and personal liability policies to make sure you’re adequately covered.

Equally important, write or update your will. If you die without a will your assets will be distributed according to state law, not necessarily according to your wishes. At the same time, check that your designated beneficiaries on your life insurance policies, retirement plans, and investments reflect your current wishes.

You also need to prepare for the possibility of incapacity by creating or updating three necessary documents. A durable power of attorney for finances allows you to designate someone you trust to manage your financial affairs. A durable power of attorney for health care appoints someone to make decisions about your medical treatment. And a living will spells out your wishes regarding the use of life-sustaining procedures.

Article is for educational purposes only and is not intended to provide specific tax or legal advice. For answers to tax questions, please see your tax professional. For legal questions, consult an attorney.

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