It's not so much the questions you ask about your personal finances that can make all the difference - it's the questions you don't ask.

 

Before I retired, I worked on big-name financial websites for years, often writing responses to frequently asked questions (FAQs). I always loved answering FAQs; I believe that helping consumers understand their finances is noble work.

These days, FAQs are one tiny piece of a broader effort to improve Canadians' financial literacy. The creation of financial websites, blogs, personal finance columns, online and mobile self-service resources, social media outreach and improved training of financial advisors have helped Canadians like you and me take charge of our finances.

 

You can access almost all those things 24/7, so access to information is no longer a barrier to financial literacy.

 

It's what you don't ask that's the problem.

 

As a recent retiree and current reader (vs. writer) of FAQs, I've come to recognize that some of the best questions are asked infrequently, if ever.

 

The answers to these questions can help you use your money more effectively and achieve your financial goals:

 

Who am I? 

It sounds like a stupid question. But look closely at several months of bank statements from your main chequing account. Yes, your name is at the top, but how well does the pattern of financial transactions shown on the statement fit the life you want to live? What are you spending your money on? Your bank or credit card accounts don't speak up when you lose your way, like a GPS system would, so it's up to you to keep a close watch on your spending.

 

What are my goals? 

Things important to you generally cost money. If you haven't written down your goals, put away your wallet until you do.

 

Does today trump tomorrow? 

Card players often ask "what's trump?" to figure out how to play their cards. In your financial life, a better question may be, "when is trump?" At some stages of life, "today" is trump and you have to focus on short-term spending. But sometimes, "tomorrow" needs to be trump, so you can achieve longer-term goals, by putting current spending on the back burner. Be realistic: If today is always trump, tomorrow isn't going to turn out well. And if tomorrow is always trump, today won't be much fun.  I remember when my wife caught my attention by counting how few paydays remained before we became empty-nesters. Trump was about to change ... and we needed to change our game strategy.

 

Am I getting distracted? 

Is something drawing your attention and resources away from pursuing your goals? I really like the styling of some of 2014 cars, for example. But my key personal goals have nothing to do with replacing my perfectly serviceable, five-year-old car. So I ignore those fetching car ads.

 

When will I pay this off? 

Be brutally honest.

 

What am I missing? 

A good financial advisor is worth his or her weight in gold, asking you questions you probably aren't asking yourself. Advisors are better trained at this stuff than we are. They have better discipline than most of us. They're better at the math. Get a good advisor.

 

What could go wrong? 

Life is like a game of snakes and ladders. If you're like most people, you're excited about the chance to do well in life and climb those ladders. But don't forget the snakes. If you lost your job, could you manage your debt? If you had to retire earlier than planned, how would you manage? If you became seriously ill, what would happen? If you or your partner died prematurely, what would happen? You can rely on an advisor to address this not-so-fun stuff.

 

What does my will say? 

If you have a will, check it. If you don't have a will (and I didn't for an embarrassingly long time!), call a lawyer. It's no biggie to draw one up, and it's great to have it finished.

 

View original article here.

While this survey helps to provide some clarity around Canadian parent's lack of foresight, it doesn't elaborate on how to create or even to quantify a legacy (inheritance). While a goal of parents is to educate their children in order to help them become financially independent, most parents also have the goal of ensuring for the ongoing well being of their children. There are some steps that may help in that endeavor.

An inventory is essentially a list of all assets currently owned. This list can be as specific or as broad as you want to make it. For instance, the list could indicate that dad's hockey card collection is to be left to a specific grandchild or that the entire residue of the estate is to be left in equal portion to all of the beneficiaries of the estate.The advantage of being specific about family heirlooms is the avoidance of strife between beneficiaries who place the same value on the item. As parents we should talk to our children about what personal property they want to receive. Then prepare a detailed disposition list, perhaps even with photos (i.e., which ring did you intend to pass on?).

Goal setting is always important and includes both determining how much you need in order to lead your desired lifestyle as well as how much you wish to distribute to your heirs at death. While not easy to quantify either amount your current lifestyle requirements should not be minimized and should also include amounts for the potential of long term care and disability needs. After all you earned it.

An often overlooked aspect of estate planning is the use of life insurance as a means of protecting and creating wealth. Life insurance can provide a tax-efficient way to transfer all you've worked for to your family.

Life insurance proceeds can be used to preserve estate assets as it can be used as a facility to pay for funeral expenses, pay down debt and address tax liabilities. It can also be used to create wealth as funding of the policy can sometimes be less painful than years of saving and prudent investing.

Unfortunately many marriages end in divorce and divorced spouses often assume that upon divorce all rights of an ex-spouse are also expunged. This is however not the case as your Will is only declared invalid upon the exceution of a new Will or upon marriage. As a result many ex-spouses have cheerfully received inheritances when Wills and beneficiary designations were not updated.