Life and Money - This article was submitted on 9/26/07 to be published in the 10/4/07 issue of the 9 newspapers of Rising Publications (formerly Martinelli Publications) in Westchester County, NY including The Westchester Crusader, The Rye Chronicle, The Eastchester Record, The Pelham Sun, The Sound View News, Home News & Times, The Mt. Vernon Independent, Harrison Independent, and North Castle News.

Written by:

Frank Sisco, 30 Mill Road, New Rochelle, NY 10804

Home office - 914.740.4422, Cell - 914.740.4422; Email – ideasmoney@aol.com

www.LifeAndMoney.com

Copyright 2007 Frank Sisco

Life and Money - "Financial Snapshots"

By Frank Sisco, CPA, PFS

(Word count = 840 words plus 61 words for About the Author)

There are two worksheets that I call Financial Snapshots, which I've found to be very helpful when making personal financial decisions for my family and for my clients.    These snapshots are essential for major personal financial planning decisions about (a) spending significant amounts for homes, cars, college education, starting or expanding a business, significant medical expenses including long-term care, etc. (b) saving or investing (c) reallocations of investments or withdrawals including retirement planning (d) budgeting and borrowing or refinancing (e) evaluating the adequacy of insurance coverages (f) planning for handling estate planning including the distribution of assets, beneficiary designations, gifting and transfers, etc.    To make intelligent responsible decisions, at least big ones, you need to have the facts handy and the snapshots are important tools.   Other important tools (such as a family profile, an understanding of risk tolerance and psychological considerations, questionnaires, stories, legal documents, detailed statements, etc.)   are covered in separate articles, including about the trend toward "holistic financial planning," also called 'sensitive financial planning."   The snapshots take several hours to prepare, and often require the help of a professional.   In my opinion, they are well worth the time and cost, and often uncover many potential problems that can be corrected and may have ordinarily gone undetected.   The financial snapshots are useful for people in all income and asset brackets. I've prepared snapshots for people with less than $10,000 of assets or income, but who need correct information for social service agencies.   And I've prepared snapshots for clients who have over twenty million dollars who need to make many varied different decisions about their money and their lives.

1.   Financial Snapshot of Assets and Liabilities.

This snapshot details each asset, including investments, your home, real estate properties such as a vacation home or rental property, your business, insurance policies, etc. The liabilities section includes all your liabilities including mortgage and home equity loans, credit cards, credit lines, business-related loans, personal loans and other borrowings.   This snapshot should include account numbers and key contact information such as brokers, bankers and insurance agents.   The column that includes current values should have next to it the "as of" date.   In a separate column, next to each item should have an identifying reference number (such as L1, L2, etc. for liquid assets or R1, R2 etc. for retirement assets such as IRAs).   This reference number is handy to use on file folders that you have that contain the related supporting documents like bank statements, brokerage account statements, insurance policies, etc.    I have helped many clients organize the files of their assets and liabilities using this system and most have found it to be very helpful.   The system also represents a convenient way to update the snapshot and provide important timely information for future financial decisions, especially for older individuals who find it necessary to enroll others to help them.   Almost every snapshot I have prepared has revealed important changes that should be made.

2.   Financial Snapshot of Cash Flows.

I prefer to use a standard preprinted form I designed which has line items for many expense categories, which may get overlooked if you prepared the cash flow worksheet on a blank sheet of paper.   This snapshot should have detailed income items such as salaries of each family member in the household who is contributing to running it, business income, pensions, retirement plan distributions, social security benefits, investment income (estimated interest, dividends, capital gains), and other sources of income. The section for expenses should be categorized by expenses for household, autos, child-related, education, insurance, personal-related, business-related expenses, miscellaneous, and taxes.   Within each category, there should be detailed line items   (e.g. Under taxes, there should be real estate taxes, social security taxes, income taxes by Federal, State and City, if any).   The snapshot should have 2 columns of numbers, and filled in for each line item whichever is most appropriate - monthly (e.g. meals out) or annual (Federal income taxes).   I suggest preparing the snapshot using Microsoft Excel so that the numbers can easily be tabulated (e.g. the monthly numbers can be multiplied by 12 to give an annual total; the categories can be subtotaled and the entire worksheet totaled.)   Also by using computer spreadsheets, they can be easily updated as information changes.   In many cases when I've helped clients prepare their Financial Snapshot of Cash Flow, we found that their original drafts left out, or understated, personal-type expenses like vacation, travel, gifts to others, clothes and consumer goods, etc.     After working together, we recast the snapshots to be realistic representations of the current status, and then worked with them in identifying how to reduce (or reallocate) certain categories.

It is very important for you to have the entire picture of your finances. The right time to prepare Financial Snapshots is now.

About the author:

Frank Sisco is a CPA and Personal Financial Specialist and writes on topics related to life and money.   You can contact Frank by email at ideasmoney@aol.com or by phone at 914.589.1013 in order to express your opinion about this article or to obtain copies of prior articles.   He resides in New Rochelle, NY with his wife and daughter.