With a new family, it’s easy to get caught up in day-to-day events and forget about the long-term planning and preparation that is crucial part of your success. Here are three important tasks that you need to move to the top of your “to-do” list.
Plan: Make a long-term financial plan
Regardless of your situation, a financial plan should help you identify goals that are important to you. If you’re not well versed in the financial sector, consult with a professional to determine the benefits of a Registered Retirement Savings Plan (RRSP), a Tax Free Savings Account (TFSA) and non-registered investing as well as money for your children’s education through a Registered Education Savings Plans (RESP.)
How you allocate money, what you invest in and your financial goals are personal. The plan must fit your family needs – not the perceived demands of society, neighbors or friends. A good plan starts with your current situation (net worth, income, expenses) and then helps you plot a path to your end goals (beachside condo, volunteering, travel, etc.) Explore all of your options, speak open and honestly with your spouse and children and make a plan that works for you.
Provide: Create your Will, Personal Directives and Power of Attorney
Setting goals is the first step in turning the invisible into the visible. – Anthony Robbins
When you’re first starting out it may seem odd to spend time and money planning for what happens when you’re 100 years old. It’s not! The Will, Power of Attorney and Personal Directives for both my Wife and I cost less than $900 and took no more than 3 hours – a small price to pay to know that my children and estate will be taken care of according to my wishes.
These three documents go far beyond just providing for your family in case of an accident or emergency. Creating them offers you an opportunity to discuss important topics such as: identifying legal guardians for your children, charitable donations, family trusts or investment allocation plus issues of capacity and religious belief. Without clear and conscious decisions on all different types of issues, many of these may be left up to the courts. Get these documents created early, review them annually and revise them as needed.
Protect: Insurance for you and your income
Having the right insurance products are crucial to ensure the ongoing success of your family should you not be there to support them. Each of the previous two steps will not matter if you leave your family saddled with debt or unable to pay bills. Again, insurance needs are personal and the decision should be made after careful analysis of your requirements with the assistance of a professional.
In my case, I factored in the following: mortgage value, employment life and disability coverage, outstanding debts (credit card, line of credit or car loans), future educational needs for my children, time off for my spouse, childcare and funeral costs. Create your own list; factor in forseeable expenses then figure out the correct product mix for you.
It may seem like a daunting task trying to fit all of this into an already overloaded family schedule. The first step is to resolve to set aside time to get these completed. Ask friends for referrals or use social media – Twitter, Facebook, LinkedIn – and get one meeting set per month. Within 90 days, you will have taken one giant step towards securing the success of your family finances.