Steve TeSelle, CFA, CFP ™
August 2003
In my financial travels, I've come across several people who feel that perhaps they've forgotten to deal with some key financial issue, or that they once dealt with an issue but can't remember how they came to an answer. I thought it might be helpful to have a kind of checklist. You can put as much text as you like under each heading. The idea is that you have one place where you can keep track of financial issues.
I don't claim that this is some all-inclusive list. You may have items you
want to add or subtract. This list is simply meant to be a helpful starting
point.
Life
Who is covered and for how much? How did you decide on the amount of coverage? Do the same assumptions still hold?
Health
Many people are covered by their employer. As a self-employed fellow, I'm using a Medical Savings Account; but I keep forgetting exactly how it works. You can write down some key points about your coverage - or not.
Home
What is your coverage? Is it for replacement value?
Auto
Do you have the minimum liability coverage, or something higher? How did you decide on the coverage? Do you have collision and/or comprehensive? If you have an old car, do you still need that additional coverage?
Disability
This is for if you get hurt and can't work. Usually, you can get reasonably-priced coverage through your employer.
Long-term Care
This is one where I'm willing to take on the risk rather than pay the premium.
Different people will have different answers here. But, in my early 40s, I think
there's a very small chance that I'll need to be in a long-term care facility
any time soon.
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What's your asset allocation, and how did you decide on it? For example, perhaps you settled on an asset allocation of 80% stocks and 20% bonds because you're young, have a steady income, and want higher returns in exchange for a higher level of risk. Of the stock allocation, 10% is in mutual funds that invest in stocks outside the US and 70% is in stocks and/or stock mutual funds within the US. The bonds are intermediate-term bonds.
Where are the accounts?
If this section takes multiple pages, maybe you could do with a little consolidation.
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Will
I hope you have a will. You might note on your checklist the last time it was reviewed.
Any other thoughts
You may want to write down any goals you have for giving anything to your children
or grandchildren.
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How much do we need?
You can simply note that you need lots and lots of money before you can retire. Or you can come up with an approximation using one of the many retirement calculators out there on the internet. Just remember that a dollar today is not the same as a dollar in ten or twenty years. Dollars have to go with years. So you can say you need $2,000,000 in 2002 dollars, or about $3.6 million in 2022 dollars (assuming a 3% inflation rate over that 20-year period).
When will we retire?
Do you want to retire the day you reach your savings goal, or do you have some
other view of retirement? My own view is that I'll be providing keen financial
insight well past any official retirement age.
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How much?
Saving for college is really frustrating because how much you will need depends on where your child is accepted and chooses to go, as well as the completely unpredictable rate of college cost inflation. So just take a stab at a number.
When is it needed?
Once again, keep dollars with years.
Strategy
Some people will tell you the best strategy is to have no savings so that you get the maximum financial aid. Maybe. But my experience is that the people with money are the ones who get to make choices. The whacky world of college financial aid may turn that dictum upside-down at times, but generally, I'd rather have more money than less.
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As I wrote at the beginning, this isn't meant to be an all-inclusive list.
But it's a pretty good start. Feel free to add your own headings, such as buying
a house, charitable giving, or planning for a trip.
"I want to eat more Chinese food, too. I'm just saying we should put
that on our New Year's resolution list rather than our financial checklist."
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management, investment planning, financial planning, DORATO Capital Management
LLC, Dorato, Steve TeSelle, investments, finances, investing, portfolio, portfolio
management, investment management, investment planning, financial planning,
DORATO Capital Management LLC, Dorato, Steve TeSelle, investments, finances,
investing, portfolio, portfolio management, investment management, investment
planning, financial planning, DORATO Capital Management LLC, Dorato, Steve TeSelle,
investments, finances, investing, portfolio, portfolio management, investment
management, investment planning, financial planning, DORATO Capital Management
LLC, Dorato, Steve TeSelle, investments, finances, investing, portfolio