By: Joseph Goldy, CFP®
In our series on empowering newly Independent Women to achieve financial security, we delve into the often underestimated importance of organizing financial documents. Join Joe Goldy as he uncovers the three significant benefits of maintaining well-organized financial records, offering insights into financial transparency, legal compliance, and emotional closure. Discover how this simple yet powerful practice can advance financial Independence and peace of mind.
Introduction
Hi, Joe Goldy. Welcome back to our series on helping newly Independent Women become financially secure.
So, there are many benefits to being well-organized with your financial documents. Three of the biggest that I find are financial transparency, legal, and emotional. And for emotional, we come at it from a unique standpoint, so I save that one for last. You don't want to miss it.
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Real-life Story
I would like to share just a quick story. A couple of years ago, a client came to me, and unfortunately, she was going through a divorce. She announced that and said, "Joe, do you mind if you can help me kind of go through my documents and help me get organized a little bit?" Of course, I'm happy to help.
A couple of days later, she came in with a big banker's box, a big cardboard box with all her documents: tax, mortgage, and bank and brokerage statements. It looked like a tossed salad of financial papers in there. So, it took us a good couple of hours to get her well organized so she knew exactly where she stood. And I don't want that to happen to you.
Benefits of Organization
Financial Transparency
Let's get into the first benefit of being well organized, which I find is what I'll call financial transparency or financial clarity. If you think about a divorce, it's a series of negotiations. You're negotiating on alimony, and you're negotiating on child support, property division, and visitation schedules. There's a series of negotiations happening for you and your attorney. To be in the best position to negotiate on your behalf, your attorney has to know exactly where you stand. The only way to do that is to be well-organized with your financial documents.
Another benefit is you don't want the other party and their attorney to think you're hiding anything. Not that anybody would, but it does happen, and you don't want the other party to think you're not being transparent. So, from a negotiating standpoint, ensure you're well organized with your documents: tax statements, mortgage statements, bank and brokerage.
You want to bring everything to the table for that initial divorce negotiation part of it. You might not have to keep all these statements down the road forever. I help clients make sure that they are well organized, and we try to simplify their financial life post-divorce.
Right now, you want to ensure you're well organized with all your documents so your attorney can see them. A secondary benefit to that, too, is that, as we're talking about it, it simplifies your financial planning. So, you know, I work with many clients who, post-divorce, want to ensure that the goal is financial Independence. So, simplifying your financial planning and knowing where you stand from a cash flow standpoint all lead to what I think is the main goal: Financial Independence. You don't want to rely on anybody post-divorce, and you know exactly where you stand for your future.
Legal Compliance
A second benefit that I find is kind of from a legal standpoint. As you go through a divorce, there is no shortage of agreements you must comply with. There are visitation schedules, alimony, and child support that may be paid or received, and there are lots of different legal aspects to a divorce agreement that you have to adhere to. Being well organized with your financial documents ensures that you comply with all those agreements, which is very important, not just from a standpoint post-divorce.
You want to minimize any disputes with your ex-spouse at that point, but even from a legal standpoint, you know there are certain agreements that, if they're not adhered to, could create legal complications for you in a worst-case scenario. This is a great example; unfortunately, I often see it with visitation schedules. You know you're going through a divorce, you're negotiating on a visitation schedule for children, and post-divorce, it's easy to forget who has who for the holidays. There are many different holidays throughout the year: spring break and winter break. Having that agreement well organized so you can easily reference it again eliminates disputes. That's the whole idea: easy reference. If you're well organized, you know precisely where to go to eliminate those kinds of conflicts.
Emotional Closure
So, the third benefit of being organized with your financial documents is one that many people may not even think about. It's more of an emotional benefit, and I mentioned we come at it from a unique perspective. What I've found over the years of working with a lot of divorced clients is, you know, divorce is the closing of a chapter of your life, and really, you want to focus on the future being well organized with all of your financial documents. And the agreement itself eliminates the need to have to revisit the past. You don't want to have to rehash agreements that have already been worked out. That's the last thing you want if you're focusing on your future. Being well organized, having all of your financial documents available for easy reference, knowing where you stand, again, the goal is financial Independence, and closing that chapter provides that closure that many people are looking for and allows them to focus on their goals and future.
Conclusion
That's one of the most significant benefits that many people don't realize, and I see it all the time, so I hope this helps recap the three benefits I see. Financial transparency is one of the most beneficial reasons for being well organized, essentially putting you and your attorney in the best spot to negotiate on your behalf. During the divorce and post-divorce, from a legal standpoint, it is another benefit to make sure you comply with all of the agreements that come out of a divorce, like visitation schedules, alimony, child support, and property agreements. The third is emotional. That's a hidden benefit that people don't realize; just make sure you don't have to dwell on the past again. You're focused on your future and being financially independent.
Call to Action
So, I hope this helps. You can click the link below to schedule a free 15-minute call with me. I'd be happy to chat with you anytime, and I'll talk to you next time. Take care.
Joseph Goldy, CFP®, is a wealth advisor and CERTIFIED FINANCIAL PLANNER™ at Highland Financial Advisors, LLC, a fee-only fiduciary wealth advisory firm based in Wayne, New Jersey.
Joe specializes in working with newly independent women because of divorce or losing a spouse. He understands firsthand the value of having a clear financial picture pre- and post-divorce and a plan to restate goals as a single person. When he is not helping clients, Joe enjoys spending time with his two sons outdoors and volunteering to help raise money for Type 1 diabetes organizations.