Were we unprepared?
It’s rare that I have the time to sit down and think about my own affairs, I am usually pre-occupied on the affairs of others. However, as I sat with my wife, Gemma watching the series ‘You’ on Netflix last week my mind kept wandering to our own financial affairs.
I don’t think I have ever been so relieved to have the comfort of knowing what I know. You will read headlines in the paper saying markets have crashed but seeing my own investments down 28% didn’t create the same level of anxiety as the concerns of the wellbeing of my family and friends.
It made me think, I need to sit down with Gemma and our family and make sure they know the plans we have should anything happen to us. Gemma manages our day to day cash flow, but the actual plan and framework has been set up by me. It’s a team effort, but one that works for us.
As I am sure most people do, I worry about the impact that my death or incapacity would have on Gemma and our son, Seb. The last thing she would need at that time, is to have to worry about figuring out our finances.
So, talking, however uncomfortable, is so important - you need to all be pulling in the same direction.
My advice to you, therefore (as you observe social distancing and isolation) is to spend some time talking about the “what if”, as difficult as it might be and organising your financial affairs.
Do the right people have the right information about you?
This is one area I am probably not up to date on. We have a joint filing system but, would we be able to get our hands on everything we need at the right time? Probably not. In the world of online filing and shared collaboration, it’s easy to create and share key information with others. You can restrict who sees what, but you should have the key documents in it and available to others.
For example, ensuring copies of our Will are available to those who need it.
There are great online resources available, but if you get stuck, you can drop me an email or message and request a copy of our free workbook, to help guide you.
Interestingly (or not) following my brothers passing last year, it’s not just the information we would assume is relevant and important, but also the things we don’t think about that often - for example agreeing your wishes around Social Media, instructing Facebook what to do with your account when you pass away, ensuring passwords are stored somewhere should someone need them, deciding if you want your data erased etc. These are all modern problems which, if your Will was written some time ago, you probably didn’t have to think about at the time.
So, what can you do now?
It is a stressful time, but this provides us with a fantastic opportunity to use the time wisely, to our own action plans.
Our own plans were originally put in place nearly seven years ago and a lot has changed since then. What was appropriate then is probably not appropriate now, so having a chance to review these is important. We didn’t do Powers of Attorneys back then – for the same reason as everyone else, we were young, fit and healthy, so why did we need those? I have now printed the forms and will be completing these this week.
The key areas you need to think about are:
· Power of Attorney for Health and Wellbeing
· Power of Attorney for Financial
· Nominating beneficiaries on your Pensions
So, returning to the theme of this Post - You were unprepared if:
You didn’t think cash was important.
Well, more specifically, it’s around Cash Flow management. If ever there was a great illustration of why you should have a cash buffer, this is it. It is not easy, and if you’ve lost your job, been furloughed or otherwise had your income reduced or eliminated, this probably comes too late.
However, once you get over this current situation, and you will, you need to think long and hard about preparing. As a guide, we use 6 months expenditure as a benchmark for cash, but whatever amount you decide upon, it needs to make you feel comfortable. You need to build a buffer, and if that means sacrificing in the short term, you need to do it.
You didn’t think Life Assurance was important.
Think about those who depend on you. Do you have kids, a stay-at-home partner or if, like me, you have older relatives who are dependent on you, you need Life Assurance.
If you don’t, you should probably consider getting some, but most people grossly underestimate how much they need and end up falling short in their plans. Make sure you speak to a Financial Adviser.
You didn’t think having professionals in your corner was important.
A Financial Adviser can help with some of the themes in this post.We can help you build your Action Plan, we can help you to review your Financial Plan and identify weaknesses in it that maybe you hadn’t considered. We work with clients to help them through times like this, and whilst we can’t take away the worry or the concern, we can be there to work through it with you.
But its not just Financial Advisers, having the right legal guidance on structuring Wills and Power of Attorneys is also very important.
If you have taken the time to read this, I hope it shows how working with a Financial Planner can be valuable to you.