You are working on managing your personal finances. You have set financial goals, determined your net worth, and made a budget. You have developed a savings plan and dealt with your debts. You have explored ways to cut your taxes. Is the plan finished?
The next step is to get your financial house in order, and be prepared for the future.
First, simplify. Then, be prepared.
We recommend that you simplify your financial affairs. Here’s how:
- Eliminate unnecessary bank accounts. You do not need five accounts at five different banks. One or two accounts should be more than enough.
- Eliminate unnecessary RRSP accounts. Again, one account per person is usually sufficient.
- Eliminate unnecessary insurance policies.
- Don’t carry any more than one or two credit cards.
While simplification is important, you must also be prepared. Here’s how:
- Make a will. If you die without a will, your assets may not be distributed according to your wishes. A lawyer can draft a will relatively inexpensively; it’s worth the investment.
- Have your lawyer draft a power of attorney. It allows someone to act on your behalf if you become incapacitated through injury or illness.
- Get insurance. If you support your family, you should have insurance to protect your family if you are injured or killed. Seek expert advice from a reputable insurance agent.
- Build an emergency fund.
You get the idea. The more accounts and documents you have to keep track of, the more likely you are to lose track of your financial life. The more security you have, and the less opportunity to grow debt (too many credit cards) the more you will be in control of your financial future.