This post is part of the CCC Personal Finance Guest Blogging Contest. If you like it, please help the author by tweeting it, liking it, leaving a comment and voting for it using the social buttons at the end of the post.
If you’re like me, you have a hard time relating to the concept of money management. You see, my outlook has always been - I don’t have enough money to manage in the first place.
My other cop-out is (and this is a huge confession for me), when it comes to money, my Mother has spoiled me to pieces over the years. The running joke between us was how she wished she could still claim me as a dependent on her income taxes! Don't get me wrong, I’m truly grateful and appreciative for all of the financial support I received from Mom over the last 50 years.
Lessons in Money Management
Now that I’ve admitted how much of a spoiled brat I am, I’ll make an attempt to redeem myself by giving you some of the financial lessons I learned, and the advice handed down to me from my Mom and Dad (with a little help the Grand Diva of money management Suze Orman).
I'm sad to tell you that my mom passed away last March. Emotionally, I was completely devastated (not to worry though, I’m sitting here with a box of tissues and my best friend is near-by in case I need a hug). Yet because of her guidance and careful planning, at least I was prepared to grasp the financial torch she handed me - and the responsibilities that come along with managing it. Here’s some of the most important financial lessons to help you prepare yourself and your loved ones when the time comes:
1. Make a will
I realize that writing your "Last Will and Testament" is probably not on the top of your to-do list. But if you don’t have one already, and you have loved ones to protect, then now is the perfect time to get started on it. The first order of business is to make a list of your assets and make a decision about who you’re going to appoint as the Executor (or Executrix) of your will. The Executor will ensure that your final wishes are carried out and your estate is distributed as per your instructions. In essence, it’s actually quite an honor to be named as an Executor in someone's will. There's a certain amount of pride associated with the fact that the dearly departed placed the ultimate trust in your judgment and your ability to handle the job.
Three times my Mother was named Executrix for deceased loved ones: first her brother, next her mother and ultimately my dad. So while for most of you "death and taxes" might not be the typical topic of conversation at the family dinner table, it was a conversation that my Mother and I needed to have often. I sat under her wing in amazement each time, as I watched her muddle through the very heart-wrenching and down-right complicated process of probating a will.
2. Hire a good lawyer
If you have a home, a car, a bank account or any other tangible assets, get a lawyer to draw up your will. Don’t try to save money with a do-it-yourself kit. A lawyer can offer advice and provide invaluable services for you and your heirs, that you won't find in a DIY kit. It’s a one time investment for you - so suck it up!
3. Update the beneficiary forms on every one of your bank accounts
For every savings, checking, retirement or investment account in your name there should be a beneficiary listed with the banking institution. The big surprise here - the beneficiary listed on your bank account has the ultimate authority and trumps any designation you make in your will. (Your lawyers should tell you this and if he doesn’t, get a new lawyer). Here’s a quick example. 40 years ago my Grandmother opened a bank account, and in her will she stipulated that the account be used by the Executrix (my Mom) to cover her own funeral expenses. None of us realized until after Grand-mom passed, that when she originally opened the bank account, another family member was named as the beneficiary...I’ll let you guess who ended up paying the funeral expenses - out of pocket.
A Money Management Tip You Can't Ignore
4. Get more life insurance
I know this one sounds counter-intuitive at a time when some of you might be trying to reduce household expenses, and you might even think that you already spend enough money on insurance coverage as it is. But I’m betting that you probably don’t. Let me put it this way, do you think the cost of life insurance is going to increase or decrease in the next 5 - 10 years? You guessed right - the rates are going to go up - so you might as well lock them in now. You want to know the best thing about the life insurance money you pass on to your loved ones? There's no inheritance tax on life insurance benefits. My advice is to get yourself a reputable insurance agent and stick with them! In this short video from MoneyMindedMoms listen to Suze Orman's response to the question "How Much Insurance Should I Have?".
5. Have “the conversation”
By that I mean, tell your Executor or beneficiaries where the paperwork is. (This is the part where I need to grab the box of tissues again, because I’m going to tell you what happened with my Mom.)
Right before Mom passed, she was in the hospital for a few day awaiting surgery. While she was there I visited everyday and we had the chance to spend hours chatting. At the time we thought I would need to file her income tax returns while she recovered from the impending surgery. So as fate would have it, Mom gave me a list (in fact she made me write it down) of where everything could be found. When the time came, I knew where to locate all of the legal documents, bank statements, property deeds, income tax forms, you name it. I knew what lawyers and insurance agents to contact, and more importantly... I knew just what to expect. (Oh boy, the box of tissues is half-way gone now, but I’m going to take a deep breath and wrap this up!)
So here I stand holding the financial torch in one hand, and a tear soaked tissue in the other. I pay a lot more attention to money management these days and you can bet I'm taking action to make sure I successfully pass that torch on to the next generation when the day comes.
Let's Hear Your Money Management Plans
Now, I'd love to hear from you. Are you prepared to have “the conversation” about money management with your loved ones? What's your experience with wills and probate?
I'm Ileane and my blog is Basic Blog Tips. I share tips for blogging and social media optimization. I also provide how-to video tutorials to help you reach your blogging goals. Please follow me on Twitter.
Ileane, this is a great money management post. I agree with most of your points, and I’d like to suggest one minor change in your strategy:
Consider updating your will at appropriate times. Financial situations may change and your will needs to be updated accordingly. So, rather than a one-time investment, think of it as a periodic financial insurance premium (for lack of a better term).
Thanks for sharing your story in the most relevant context. I’m tweeting and stumbling, for sure.
Cheers,
Mitch
Hi Mitch, excellent point. As time goes by the need may arise for us to alter our will. Thanks for bringing that up and thanks for the support in the contest.
Wow Ileane! Very powerful article. Sounds to me your mom was a VERY smart woman… you take after her.
Thanks for the sound advice. I’ve had multiple conversations with my mom about this very same thing. It’s a difficult topic to discuss… no one wants to think about there parents mortality.
I myself had not created a Will. Although I think I have a long way to go, I know it’s naive of me to think this way as there are no certainties in life.
Thank you for the advice. It has inspired me to get my act in order. So very glad I headed over here!
Hi Michele, I’m glad you and your Mom had those conversations, hopefully the two of you will sit down with a good lawyer and make your decisions formal in a Will. As you said, one never knows who will pass away first, and I’m sure you want her to be protected financially too. Thanks for your comment Michele.
It is odd that in many situations, we only remember to do this kinda things at a later stage. Guess it has to do with “succession”. I know this because I had to face the same situation and fortunately, I learned earlier through a friend that boasted, saying “he had” everything under control. The funny thing that I’ve learned from him is that he replaced the “tit for tat” (conversation with something that I thought was quite original. He told me that he was never and we never be comfortable in talking about things such as a will or testament. Instead he told everyone interested that there is “a sealed” envelope inside a glass jar, which he glued with “superglue”. On this jar, there is note pasted right in front of it saying, “break the glass only in case of emergency”. Needless to say that he had everything in there, from his personal inventory, life insurance policies, will and everything else.
DiTesco, that’s a very touching account of what happened with your friend. Your friend might have thought it better to keep his wishes a secret from his loved ones, but he was keen enough to put his own unique twist to the “golden rules”. Thanks for sharing that story with us.
This is really solid advice Ileane.
I can surely relate having experienced this with my parents, Aunt then later my Brother, who had NO insurance whatsoever. Insufficient or no coverage places unexpected burdens upon the survivors, making an already difficult circumstance even tougher to deal with.
Being the sole survivor from the household I grew up in, I would also add that people should seek out an attorney and have an advanced medical directive created in the unfortunate event that you are somehow incapacitated and unable to relay your wishes for treatment.
None of this is in the forefront of thoughts, particularly the younger folks who have that feeling of invincibility, but as we begin to age our mortality does come to mind.
Your point regarding insurance is a very good one and it is strongly advisable to have the terms and conditions of any policy reviewed by a professional to avoid any surprises when coverage is most needed.
Too often the conversation is avoided or put off for another time, but it is critical to have these talks with family members in advance of a crisis. Smart money management techniques can provide for a life of comfort and less stress even if our lifestyle is a modest one.
Thanks for sharing this informative and touching article, Ileane. I am sure your parents are just smiling from above.
Jimi, wow I’m sorry to hear that your brother didn’t have any life insurance. It happens way too often when the surviving family needs to take up donations from friends or community members in order to cover burial expenses.
I’m so glad you mentioned the health-care directive. This is another topic that any good lawyer will surely bring up when clients need to have a will drawn up. The Power of Attorney (POA) documents and directives should be part of the package too. Advanced directives are very similar having an Executor in your will but you must have both. In the event that something happens to you and you’re incapacitated, someone else should be appointed to make important decisions about your medical care and treatment.
Thanks for saying that about Mom and Dad, and thanks for your insightful comment.
Great tips Ileane!
I haven’t had the conversation but it is important to do so, but it scares the crap out of me.
My mum and dad have been great in money management and that is why I am able to write and blog. Without them, it wouldn’t have been possible to get in the position where I am now.
Gautam, it sounds like you have wonderful parents who look out for your best interests. I hope you’re learning money management from them every chance you get. Thanks Gautam!
Hi Ileane,
I’m sorry about your mother. I felt your loss in this post.
Oftentimes, this topic is hardly ever discussed and when the time comes to do what we need to do, it can be a disaster. I know, because I’ve experienced a loved one dying with no insurance, no nothing. Guess who had to foot the bill? Yours truly. I learned a valuable lesson behind that. You shared everything we need to do in order to be prepared for those times, that we don’t like discussing.
I especially like that you tell us to hire a lawyer. Having a lawyer help with our wills is one of the best things we can ever do.
I didn’t know about the bank account information. Learned something new and you best believe I’ll be checking into that.
Thank you for sharing this valuable information.
Take care,
Evelyn
Evelyn, thanks for your kind words of sympathy. It hasn’t been easy but it’s a great comfort for me to know that my Mom’s wishes are being carried out. You’re a good person and it takes a kind heart to step in and cover the funeral expenses for your loved one like you did. In the end, you’ll probably sleep better at night knowing that you did the right thing.
When Mom passed I changed the beneficiary designation on all of my accounts and as it turns out, she was listed as the beneficiary on quite a few of them. I guess I never got around to changing them when my daughter became an adult. So please take action on this as soon as you can.
Thanks for sharing your experience with us Evelyn.
Great post Ileane, I think we all have to be careful with our money management in the current financial climate, when it comes to wills, I don’t like to think about them just yet, even though I suppose I should really
Hi Karen, Wills are a topic that most people don’t like to discuss but I think now is a good time for you to start thinking about it. Thanks for your feedback.
That’s sad to hear about your story.
At my age, I think people are not considering the money management plans much as they are trying to make money.
The concepts of lawyer, beneficiary forms, or life insurance are also not popular in my country as the living standard here is very low. So, I am a bit confused with what you mentioned in the post.
Hey Tuan, I’m not familiar with the laws in your country, but I appreciate that you came over to show your support for this post. Thank you!
Hi Ileane,
Sorry to hear about your mom. I can so relate. My mom died at 67, the big C. Thankfully, she told me everything I needed to know as your mom did.
These are highly important tips, especially the will and beneficiary tips. I can attest to that. My mother in law passed last year. I am the PR of the will. Her financial documents were in total disarray. A year and a half later I am just finalizing her stuff. It’s not like there is a huge estate just missing so many vital things. I have an appointment today and hope no more loose ends or missing docs delay this further.
Thanks for sharing this most vital advice.
Hey Kathy, sorry to hear about your mom and mother-in-law. It makes a huge difference when the paperwork is easy to get your hands on. I hope things work out well at your appointment. Keep me posted and thanks for sharing your feedback too.
Hi Ileane, thanks for the share. I believe money management is also the process in which you gonna manage your risks in future investment accounts.
I am glad I have read your golden tips of unbreakable rules which would help me have a successful investment and money management experience. Thank you
Kira Permunian
Hi Kira,
Investments are a big part of personal finance and money management, there can be some risks involved so it’s best find a good advisor with a proven track record. I’m glad you liked the post, thanks.
Thanks for sharing your story Ileane. I could feel your grief as you wrote. You certainly have built a strong case for addressing your will, insurance and investments. I do need to address our insurance as we are at an age where we should seriously consider converting from term to permanent.
We have had a will since our children were in their late teens. Having said that, we were sorely remiss for not addressing it when they were younger. To us, the chore of assigning a guardian for our children was such a heart wrenching decision when they were babies that we refused to address it.
My mom was executrix for my dad but they both made me promise to be executrix for them. It is an honor but one I dread having to take on.
Sherryl, since you and your spouse have your will in place I hope that the healthcare directive and power of attorney forms are done too. Have a talk with your insurance agent and they can advise you on the level of coverage that’s best for your family.
Thanks for stopping by with your input.
Hi Ileane,
It’s a tough job, but somebody has to do it. These things you are speaking about are things that not many people want to think about, much less do anything about, myself included. One thing we took care of, which should make things easier, is to purchase our gravesites and stones. We could have even bought our coffins ahead, but I didn’t really think I wanted to store them in our garage. Might be kind of fun around Haloween, but I don’t think I’m that kind of guy. Thanks for the reminder about necesarry things.
Lou Barba
Hi Lou, every decision that can be made in advance helps to minimize the burdens left on your family. Thanks for your input.
Hi Ileane,
This is one of the most touching financial advice posts I’ve ever read! That’s so intuitive of you because money is not just about business – it’s a personal and emotionally charged.
I know making a will is so important, yet somehow it just keeps getting pushed to the bottom of the priority list. I know it needs to be done, yet I keep procrastinating. Thanks for the reminder that I need to get to work on that.
Awesome post – I wish you the best of luck in this contest.
Hi Kiesha, thanks for your support and your kind thoughts. Have you considered increasing your insurance coverage? That might be the way to go in the mean time. Talk to you soon Kiesha. I wish you luck in the contest too and I can’t wait to read your entry.
Thanks, Ileane! I don’t think I can top this post right here, but I’m definitely shooting for the next spot in line
Thanks for the vote of confidence.
Hey Ileane,
I am sorry to hear about your mother, I think we can all see from the post you wrote that she inspired you greatly.
Your advices should definitely be taken in consideration by all those that want to have an easier life after the passing of the one that maintained the financial part of the family or any member of the family for that matter.
Having an insurance is, kind of ironic, a life saver for those that survive and continue with their life, mainly because they can cover the expenses of the funeral and maybe even have something left to cover other expenses.
I also want to add, that I am not prepared to either give or listen to “the conversation”, but I think it’s something that must be done even if it’s not pleasant.
Hi Alex, I appreciate the kind words and your honesty. For now, maybe you could just check with your banks and make sure the correct beneficiaries are listed. At least that’s a start right?
Due to a big crisis in my family last week, I wrote a post about how “those left behind” are affected by these decisions. I hope you’ll all heed Ileane’s wise advice and get these things done.
If you’re interested, you can see our situation here: How Seniors Can Make It Easy on Their Families.
Thanks so my parents for their great example.
Hey Alison, I read your post and it sounds like your folks and mine have a lot in common. I wonder if they learned from past experience or if this is like a mantra that is handed down from one generation to the next by word of mouth. One thing is for sure the “word of mouth” route is certainly less painful than learning from experience.
Thanks for sharing the link to that post which is a another great personal finance story and I hope your Dad has a speedy recovery!
Ileane, I think a lot of it had to do with living through the depression. My folks really learned how to be frugal, how to save, how to avoid waste, how to live within their means, etc.
For the past many years I’ve been baffled at the amount of government spending for this very reason. People want stuff — whether they can afford it or not. They think money is magic and falls from the sky. They will vote for anything or anyone that promises them free goodies. It just doesn’t work. At some point, you have to go back to the math.
If anyone wants to see a very inspiring and realistic portrayal of the Great Depression, watch Cinderella Man. Love that movie — and the message.
BTW, RTed this again. I really hope you win the contest!
Hmmm. When I used the button above to RT, the count went up to 132. Now it’s back to 131. Maybe there’s a bug in the counter?
Thanks for pointing that out Alison! And I appreciate the comments, retweets and Facebook shares too.
Alison, I’m not familiar with that movie but I’ll be sure to check it out.
My Dad was always very cautious with his spending, but I never knew what motivated him to be that way. I suspect that it was just his personality because he was always a flashy dresser and always drove the finest cars. I’m pretty sure that’s what caught Mom’s eye back in the day. I found some pictures of him as a teenager and I can’t say I blame Mom in the least.
At this point my strategy is just trying to make my blog profitable and not get kicked out of my apartment! But this is a great article and I will definitely refer to it as I make plans for the future
LOL! I hear you girl. Keep putting out fantastic content, do some guest posting on authority blogs in your niche and find a great contest (like this one) to enter. I have some other ideas that you might like to. I’ll chat more with you about them soon. Thanks for your comment!
Good grief, Girl! Why’d you make me read this today?!!!
You know the woes I suffered by a loved one not having the conversation … MRF! And because of what I experienced then made me immediately take action and have the “talk” with my family and make preparations.
Who would think a post like this would be so touching, it may affect me the way it is because of my closeness and history. Ileane, today just wasn’t the day. SMH
I am glad, however, that I read it as it is PACKED with some useful information that we ALL (unfortunately) need … it’s life. (no pun)
My dear Kissie, I know that this is a touchy subject but it’s one that we should not ignore. I’m glad that I was there for you during the passing of your beloved Micheal and I’m inspired by the strength and courage you’ve shown through it all.
Knowing your children the way I do, I’m sure they are comforted knowing that you have a financial plan in place for them, so I’m pleased to hear that you guys had “the conversation”.
Thanks for sharing your thoughts and for your encouragement as always.
Good stuff, Ileane. Mind if I add one tip? When putting together your will, and other important paperwork, be sure to include paperwork that ensures your beneficiaries know everything there is to know about your online business. Affiliate logins, paypal info, site info, domain name info, host info, usernames and passwords to everything imaginable. Don’t make it impossible for your dependents to continue on with your online business. They may desperately need it to pay the bills.
Donna, of course I don’t mind, that’s a great tip. Passing on the family business can take many forms and having an online business presents a unique set of circumstances to consider.
I think this could be a very fun way to bring up “the conversation” with your loved ones. It’s also a great way to introduce them to a new revenue stream that they can start up on their own at any time.
Thanks for your input dd