Can you answer these questions about your financial plan?Submitted by Margaret Bennett on August 10th, 2017
“My spouse looks after our financial planning.” I hear that a lot. While it’s great that one partner is looking out for your family’s finances, I encourage both of you to know what plans are in place. After all, what if something were to happen to the planner? Regardless of gender or relationship status, chances are at some point in our lives we're all faced with the responsibility of managing our own finances. This article really resonated with me to explain why, when it comes to money, you need to be able to think “single”. Although it talks to women, I believe it's applicable to either gender as a concept and encourage you to read it.
At the end of the day, you need to be able to answer some questions about the financial plan you have in place because you may (unexpectedly) become the planner. You should have someone that you know and trust who knows what plans you have in place in case you aren’t in a position to act on them yourself. A friend of our family's brother was in a car accident last year and in a medically induced coma for months. His family had to act as his financial power of attorney (in addition to medical) to make sure his bills were paid and knowing how the finances were organized would have reduced a lot of the stress.
To feel confident that you know the financial plan that's in place for you and your family, here are some questions you should be able to answer about your family's financial plan:
- If a great opportunity came along, I know I (we) have access to money to take advantage of it?
- I know that if I (or my partner) were out of work, or wanted to take a leave of absence from work, I know how long it would be before there was an impact on our lifestyle?
- If I retired tomorrow I know what resources I have in place to fund my retirement?
- If I (or my partner) became ill or disabled, I know how much monthly income I’d have?
- If my spouse dies, I could stay in our house and I know how much of his/her income would be replaced?
It might be uncomfortable to think about some of these things but having a financial plan means knowing that your family will be okay; whatever happens. It’s heart breaking to read stories like the Newfoundland mother who was diagnosed with cancer and died a week later. Her family has understandably struggled emotionally and financially and sadly she didn’t have life insurance in place. We don’t want to think about those kinds of things happening, but we all want to know that our families are taken care of if something unexpected happens.
When I meet with people, we take a look at the four cornerstones of Financial Security that everyone should think about and have in their financial plan. These speak to being able to answer the questions above. Over the next few posts I’ll look at each of them conceptually; recognizing that each plan is unique.
Regardless whether it’s you or your spouse who “looks after the money”, you need to know what your family’s plan looks like. So as a friend, I encourage you to make sure that you know the answer to these questions to give yourself peace of mind. If I can help, please contact me to set up a free 20-minute introductory meeting.
Wishing you financial wellness,
p.s. Canada Revenue Agency has recognized our collective challenge around financial literacy and put together a list of tips and resources to get you started. A Financial Security Advisor can help you make sense of what options are best for you by helping you get a 360-view of your financial situation and helping to set you on a path to achieve your financial goals.