Simple matters, multiple complications

Most of us are so busy with our daily schedules that we often forget to do some simple things – like informing banks, financial institutions and mutual fund houses that our address has changed, a particular bank account has been closed, or that our nominee needs to be changed. We act on these matters only when we are forced to act upon them.Then we run helter-skelter, use all possible sources to get the work done. Had we not overlooked these seemingly inconsequential but important issues, we would not find ourselves in a mess at the last minute.

In the last two months, I have come across quite a few such issues related to one’s personal finances. Some of them are cleared and some are taking time to be solved, even two months later.

I have listed out a few of them which I feel all of us must check and update, whenever required:

I.            Change of address:

When you move residence you need to inform a lot of people that your residence has changed.  But I have seen that more often than not, people forget to change the addresses in their life insurance policies, mutual funds, National Saving Certificates (NSC), Bonds and bank accounts (especially those which have been around for a number of years and are not so frequently used). The result is that the investor is clueless about regular returns from money back policies, dividends from mutual funds or even getting the money back on maturity of various bonds and insurance policies. So all the hard-earned money that was diligently invested over the last so many years , would not come back to you and would go back to the company.

II.            Update your bank details

There are times we rush to close our bank accounts without going into the linkages of the same to our investments. It is only when we redeem the investment or it matures, do we realise that it is linked to a bank account that we have since shut. Then the process of changing the bank account and getting a fresh cheque issued, begins. The whole process could lead to a delay of even 2-3 months in getting your money.

III.            Nomination

Make sure every investment has a nominee. One thing I have noticed is that most unmarried men nominate their mother (and not their father, strangely; i have not figured out the reason why). Post-marriage some do change their nominees to their spouses, but again this is quite often forgotten and the mother continues to be the nominee. You also need to change your nominee in the event of death or divorce. People often overlook these matters.

IV.            Shut unused bank accounts

I have come across people who hold multiple bank accounts. When I use the term multiple, I mean 8-10 accounts. Three-fourths of these have been lying dormant for quite a while and have probably even got ‘frozen’. Money is lying idle. Ideally, 2-3 accounts are more than enough. More than this just complicates matters. So the idea is to not have too many bank accounts and to close any unused bank accounts.

V.            Correct name on your PAN card and other investments

I have come across cases where the spelling on the PAN card is different from that in the bank account and in some cases there is a third spelling in the investment. All this looks fine till the time the investor decides to redeem the investment. Then begins the ordeal of sorting the mess out and arriving at a commonality. The whole affair can be quite painful and time-consuming. So do check this for all your investments and correct any errors when there is still time.

VI.            Setting up reminders

A number of times we miss out on our life and health insurance premium payments because we forget the due dates. This is dangerous asyour policy could lapse. This means all the money you had invested previously, would be jeopardised. . Mutual fund SIPs, loan EMIs are some of the dates which we need to remember. Apart from this, we also need to know when various investments like life insurance policies, NSCs, KisanVikas Patra, Public Provident Fund (PPF) accounts, fixed deposits, recurring deposits are maturing. Setting up reminders on your computer and syncing it with your mobile is the best way to remember these dates.

VII.            List all your assets and liabilities

This is the most crucial of all. Make out a complete list of all your assets and liabilities and share it with your close family members – spouse and children (once they are of an age where they can understand financial matters). It is very important for every member of the immediate family to know what and where all the investments are parked. After all the investments are being made by you for the entire family – spouse and children.

Apart from the exercise of making out a financial plan, investing and tracking the investments, these seemingly inconsequential but crucial matters will only help improve you and your family’s financial wellness.