What Documents Every Woman Should Have
This summer, Patrice C. Washington, founder and CEO of the personal finance training and development firm Seek Wisdom Find Wealth, and Money Maven of the Steve Harvey Morning Show, had an experience that's fairly common in personal financial circles: Too many pieces of paper.
During a coaching session, one of her clients, as requested, brought her important financial and legal documents to the appointment—all 25 pounds of them, from old tax returns to ancient utility bills, collected over several years and tossed into a plastic storage tub. Well-meaning as it was, she hoped to turn these documents into a cohesive plan for her financial future.
All in one hour.
How Accountants Can Help
So how can accountants interested in "helping their clients help themselves" get organized borrow a page from the Money Maven's handbook without stepping beyond their boundaries and delving too deeply into their clients' deep-seated financial behaviors?
Washington suggests they adopt a proactive approach. Send new clients a welcome package that includes a concise list of important financial and legal documents to bring to their first appointment, and emphasize the importance of adhering to the list. Tell clients the list will help them save time, maximize their visit, and any reduce stress associated with their appointment.
"Make it part of the welcome to the practice process and pitch it as a way to help you and your client work well together for their benefit," Washington said. "I think if people feel their CPA is concerned about helping them get organized it will make them feel cared for and build loyalty."
Washington said she advises her clients organizing their documents (even those they'd prefer not to look at) will ultimately relieve stress and help them gain a sense of control. "I tell them if they have all these documents in order and in one place it's a lifesaver. It will ease their stress and give them peace of mind."
While somewhat extreme, Washington says, this type of encounter with document disarray is not at all infrequent for any professional trying to help clients sort out their personal finances. A truth any CPA can attest to as well.
But, while Washington sees both men and women whose financial recordkeeping is, at best, "disorganized," unfortunately, she says, she sees a disproportionate amount of women who "haven't taken on the full responsibility" of organizing their paperwork and keeping track of the financial and legal documents that are imperative to their financial well-being.
"In my practice I've personally coached or counseled 300 people, helping them try to create a financial plan for their future," Washington said. "And while money is a sensitive issue for everyone, I see more women shying away from dealing with this responsibility, usually until something disastrous happens."
In order to help her clients get their financial house in order, Washington, in her book Real Money Answers for Every Woman, includes a checklist of the "legal and financial documents every woman should have on file."
Washington penned the book, and the checklist, she says, because as a personal finance expert and coach, she believes she has the responsibility to do more than simply help her clients organize their financial information. She is charged with helping them understand why they treat those documents, and their money, the way they do.
While both men and women can benefit from using the checklist, Washington said, she wanted to address the topic directly to a female audience to help them break down some of the lingering myths and stereotypes about women and money-management. Myths, Washington says, that are still having a very real, very detrimental, effect on the way some women handle their finances.
"Unfortunately, some women still buy into the myth that men are better with money; that it's something women aren't good at, or something 'women just don't do.' There are also some women who, if they are in a committed relationship, 'just let the man handle the money' because they feel that's still the accepted way," Washington said. "The process of organizing their documents helps women finally feel in control of their finances and allows them to be less intimidated by process of financial planning as a whole."
Washington said she also wanted to compile a complete document checklist because many people, both men and women, through no fault of their own, are simply unaware of the documents they need because they have never received the financial literacy lessons, either formally in school or informally at home, to guide them.
"The reality is, most people don't even know what they don't know, and so until they a see thorough checklist they have no idea what [documents] they need," Washington said. "It's definitely a financial education issue, and it's not just women this issue applies to…there are a definitely lots of men who don't realize they need to have these documents organized."
Regardless of the reason some women keep their finances at arm's length, Washington says the behavior almost always produces the same devastating consequences.
"Very often women just wait until something disastrous happens to figure out what's going on with their money and usually it's one of the three D's—death, divorce, or disability," Washington said. "We really have to encourage more women to take the initiative with their finances, to be aware, alert, and proactive with their money, so they are fully prepared for anything that might happen to them financially."
Washington suggests that women who want to begin that process start by organizing their important paperwork using a checklist of "the documents every woman should have." The checklist comprises of seven key categories which include:
- Family Legal Documents. Keep the paperwork associated with life's biggest transitions, such as copies of birth certificates/adoption papers, marriage license, divorce papers, Social Security card, passport, will, power of attorney papers, vehicle registration, and mortgage or real estate deeds of trust if applicable.
- Tax Statements. Hold on to copies of property tax statements, personal property tax statements and, at a minimum, the previous three years' tax returns.
- Financial Accounts. Maintain a running order of financial accounts with up-to-date bank/credit union statements, credit/debit card statements, retirement account and investment account statements.
- Sources of Income/Assets. Trace sources of income to assist in creating a realistic budget. Keep recent pay stubs for all sources of income, government benefits (Social Security, temporary assistance, etc.), alimony income, child support income, professional appraisals of personal property, and rewards accounts.
- Financial Obligations. Keeping track of spending and prioritizing bills is important. List financial obligations such as mortgage statements, lease, utility bills, car payments, student loans, alimony, child support payments, and other debts to know where you stand financially.
- Insurance. All statements and bills related to property, rental, auto and life insurance policies should be kept on file.
- Medical. Keep all health-related documents together in the event of a medical emergency: copies of health insurance ID Cards, records of immunizations and allergies, a list of necessary medications, disabilities documentation, dental records, and a living will.
Washington says compiling the checklist is simply one step in a comprehensive process for people who want to improve their relationship with money and secure a better financial future for themselves.
Ultimately, Washington believes first people need to examine the underlying causes of their money behavior, because the way people handle their money, and the documents associated with it, is simply another manifestation of the philosophy that "our roots determine our fruits."
Which means, Washington says, the results we receive on the outside are simply a manifestation of what we allow on the inside, and it's only when we truly understand our financial "roots," she says, that we can break out poor financial habits and replace them with positive, long-term financial behaviors.
"For me it's really just about teaching people to respect and honor their money—and the documents represent that," Washington said. "I ask people 'do you feel like you're treating your money as if it's important? Do you honor or respect your money? Or are you neglecting and ignoring it?' How people treat their documents shows them how they feel about money in general."