September 29, 2023 9:12 pm
September 29, 2023 9:12 pm

The Power of a Household Financial Account Summary: Streamline Your Finances Beyond Budgeting

Log in or Register to save this content for later.

Budgeting is an essential practice for personal finance. However, relying solely on budgeting may still result in a disorganized and unprepared household. To address this, creating a household financial account summary can offer a comprehensive overview of a household’s finances, providing benefits beyond what a budget alone can achieve. In this regard, I’ve gathered some valuable insights from my experience in creating a personal household financial account summary. Additionally, I’ll outline compelling reasons why you might find it worthwhile to consider implementing this practice in your own household.

Why have a household financial account summary?

Over the years, I have diligently managed my budget, initially finding it easy to keep track of my money, accounts, payments, and subscriptions. However, as I approached my thirties, life became more complex. I found myself opening new accounts for responsible necessities like life insurance, dealing with mortgages, utilities, and taking charge of the household finances for my growing family. Trying to remember all the accounts in my mind alone became overwhelming. Payments were scattered across different credit cards and checking accounts, making it challenging to keep track of their sources. Realizing the need for a more efficient system, I decided to implement a household financial account summary. This decision has brought about significant benefits, including:

Verified Login Information for Each Account: By going through each account and verifying the login information, I ensured that I have quick and easy access in the future. This gives me peace of mind, knowing that I and my partner can swiftly access any account when needed.

Converted Recurring Charges to Auto-Pay: Reviewing each account allowed me to set up auto-pay for all recurring charges. This saves me time and ensures that payments are made promptly. No more dealing with unpleasant payment processes or forgetting to set up payments later.

Created Sinking Funds for Less Frequent Payments: To smooth out our monthly spending and better understand changes in actual spending, I created sinking funds for payments that occur less frequently. By saving the average monthly spending for utilities and other irregular bills, I can track the transfers in my budgeting software. This method also enables me to earn some extra money by keeping the saved cash in a high-yield savings account.

Created Emergency Reference Sheet for Partner: In case of an emergency where I am unable to manage our household finances, I created a reference sheet with all our account details and updated login information. This ensures that my partner can quickly take over and handle our financial obligations without any disruptions or missed payments.

Added Partner as Authorized User on Credit Card: By adding my partner as an authorized user on our joint credit card, we can now earn credit card points on purchases that benefit our entire household. It’s a valuable free benefit we weren’t taking advantage of before. Additionally, having a clear purchase history helps us track our spending in different categories for better budgeting.

Consolidated Recurring Payments to Single Card and Account: I consolidated all recurring credit card payments to one card and all checking account payments to a single account. This eliminates the hassle of updating multiple accounts when a new card is issued. Now, I know exactly which accounts need to be updated, and this process only needs to be done once every few years.

Gained a Clearer Financial Picture and Relationships: By creating a household financial account summary, I now have a clearer understanding of our financial situation and our relationships with each financial institution. This information empowers me to make informed decisions about streamlining our household finances, such as consolidating functions under a single financial institution if necessary. Having a clear understanding of your financial situation is important when a single late payment can wreck your credit!

Organizational Elements and Useful Practices

While creating a household financial account summary, it’s essential to customize it according to your specific needs. However, I discovered some useful elements that could be valuable additions to consider. One such element is grouping the accounts based on their function, rather than simply listing them in alphabetical order. This approach proved helpful in understanding instances where multiple accounts served the same purpose within my household. For instance, since my partner and I maintain individual checking accounts alongside a joint account, grouping these accounts together provided more clarity compared to listing all accounts by institution. Here’s how I organized my accounts:

  • Checking
  • Savings
  • Investment Accounts (including retirement accounts and education accounts like 529 accounts)
  • Revolving Credit e.g. credit cards or HELOCS
  • Auto Loans
  • Mortgages
  • Utilities & Subscription Services
  • Insurance
  • Tax Return Information

Apart from organizing my accounts into groups, I discovered several other practices that proved to be useful:

Adding Quick Notes to Account Information: I found it useful to include brief italicized notes alongside each account, providing key information. For instance, I included details such as the recommended working capital for the checking account and the targeted dollar amount for emergency savings. Similarly, for investment accounts, I noted the time horizon associated with each account, like 2-4 years for home downpayment savings or 25+ years for retirement accounts.

Including Hyperlinks to Relevant Websites: To ensure easy access to each account’s website, I incorporated hyperlinks within the summary. While this may be obvious for accounts like Chase Checking, it proves especially valuable for accounts such as Gas/Electric or HOA that may not be readily searchable on search engines.

Adding a Column for Account Holder’s Name: To provide clarity on ownership, I included a column specifying the account holder’s name. This allowed me to distinguish between my personal accounts, my partner’s accounts, and joint accounts, providing a clear overview of ownership.

Tracking Auto-Pay and Bill Pay Options: For expense accounts, I included a column indicating whether auto-pay was set up, which account was designated for auto-pay, and whether bill pay was available through platforms like PayPal for quick payment. This provided a convenient reference for managing recurring payments efficiently.

Including Sinking Fund Details: In the case of expense accounts, I also included information on whether a sinking fund was established and how it was set up. This allowed me to track and manage funds for less frequent payments, smoothing out month-to-month spending and avoiding fluctuations in budgeting.

Providing Access Details for Password Service: Lastly, I included a description of how to access my chosen password management service, Lastpass, where all login details are securely stored and regularly updated. This ensured that the necessary information was readily accessible while maintaining robust security measures.

Steps to Create a Household Financial Account Summary

  1. Begin with a template, such as the one provided here, to structure your summary.

2. Start by listing all your accounts and ensure that you update the login details and links for each account.

3. Add relevant details about each account, such as account holder names, purpose of the account, and any specific notes or recommendations.

4. Set up auto-pay for recurring payments and consolidate payments to designated accounts, simplifying your bill payment process.

5. If desired, consolidate your investment accounts to streamline your financial management.

6. Remember to update your summary annually to ensure that all login details and other information remain current and accurate.

Log in or Register to save this content for later.