From Bucket List to Financial Planning Birthday List
The “Bucket List” concept, popularized by the movie of the same name in 2007, is about fulfilling a wish list before one “kicks the bucket”. Recently, I celebrated my birthday and probably because I’m a financial planner, I went through an exercise to review my “Financial Planning Birthday List”. This habit was started some years ago when I realized that I’m so busy helping clients review their plans that my own personal plans were neglected.
Whether it’s a Bucket List or a Financial Planning Birthday List, the purpose is the same, it’s to ensure that we can face the possibility and eventuality of death with no regrets. That is what makes life worth living. The only difference is that one is a “Things to Do” list and the other is a “How to pay for it” list.
So the next time you get ready to blow those candles on your birthday cake, perhaps you can use this 3 questions as a quick checklist to freshen up your preparation for life:
1. Am I happy with my will?
I don’t like to think about death every day. If I have a choice, I don’t want to think about dying at all. Yet, not thinking about something does not mean it will not happen. The best idea I have to deal with the subject of mortality is to plan for it and forget about it.
However, to ensure I do not ignore it to the point of neglect, I’ve made it part of my birthday checklist. If like me, you feel that the instructions are clear and the funding is sufficient in your estate plan, you can move on to the next item on the list.
2. How much investment income am I receiving?
Some years back during a financial planning conference, I heard from a speaker that many years ago, wealth is measured by income and not assets. Real wealth does not sound like “I own how many square meters or hectares of land” but rather “I collect this amount of rental every week”. Apparently, many years ago, people compare investment income rather than balance sheets.
It is a lesson I’ve taken seriously because it makes a lot of practical sense. We cannot live off the assets in the balance sheet, we can only live off the income generated by those assets. I’ve made it an important item to review every birthday and I’m glad that in GEN, we have made it part of our planning philosophy.
3. Have I insured everything that is worth insuring?
In life, there are important things and there are other things. We will give up everything to protect what is important to us. Anything that is worth insuring must be insured fully. For me personally, it’s my health, my family and my income. I don’t mind having second grade insurance for my car or house but I’ll not save on my health, family or income protection.
Similar to planning for death, I don’t like to review my insurance plans every week or month yet I cannot afford to allow the plans to turn “second grade” because of neglect. Thus, making it part of the financial planning birthday list will ensure I find the right balance.
This is a simple idea in the form of 3 questions asked during a particular time that is easy to remember. Often, the exercise consists of just a few minutes to recollect the instructions in my will, my insurance coverage and an on-line check to review my investments. Other times, I’ll take a comprehensive review approach and start making decisions and changes.
Whether it is a 5 minute mental review job or a “forms and files” comprehensive review, the key is to be prepared.
Preparation is not a sign of weakness, it is a show of strength.
Of course, there is no harm having a GEN planner to help you get organized.
Have fun with your lists!
Article by Lee Meng Choe, FChFP