The fire drill
Sep 4, 2013 / 5:00 am
We are taught from a young age to take fire seriously.
Growing up in a small town, Monday night was Fire Drill Night. Strategically placed sirens mounted on telephone poles around town would go off at 7:00pm sharp. The fire crews would slide down their poles, jump into their gear and hop aboard the trucks to arrive at the practice site which would sometimes be a simulation, other times a controlled fire. All to be sure, should a real fire happen, they would be at the top of their game.
We as student citizens also did our part; in school we did our own regular fire drills. The day would be communicated to all and the teachers would make sure we knew what to expect to limit surprises and scared children. It was a serious affair: we would line up in our classroom, be counted, then head out single file under the watchful eyes of our teacher, the hall monitors and of course the principal. Once outside, we would maintain our single file and once again be counted to make sure there were no stragglers.
The hope was first that the drills and practice would stay with us and should a fire ever start, we would revert to memory and execute flawlessly. It was also a telling way to gauge the readiness of teachers and students in the event of a fire.
When people think about their financial preparation for the future, a neural fog often develops; they look ahead with a vague notion that things will be okay. After all, there’s a group insurance plan at work, you remember signing something at the bank when you were taking out your mortgage that guarantees payment if you die (you think) and there’s always the RRSPs if something should happen to the chief breadwinner in the family.
So let’s freeze the film here and ask ourselves what would really happen if we passed away… today? What would happen to our families? Take a pad of paper, think about these questions and answer them as honestly and in as much detail as possible:
- Where are the Wills? Have they been updated recently?
- Who is the executor of your estate? Do they know they are the executor and are they capable?
- What will happen with the kids if they are minors? Are you comfortable with that?
- Are the major assets in joint name with your partner or spouse?
- Is there emergency cash available to take care of funeral expenses? How much is there and is it enough?
- Will your spouse or partner be able to work if they weren’t already? If there are young children, how will the surviving parent take care of them and still earn a living?
- How much does your existing insurance policy provide you with? Does it pay off all the debt? Does it leave anything extra? If so, and that’s part of the plan is it enough (remember, one million dollars at a 3% rate of return will only yield $30,000 per year and that’s before the taxes)?
- What about the kids, will there be enough money for them to be involved in activities you wanted to see them in: sports, camps, travel, and university?
- If you have substantial insurance policies, a large estate or both is your beneficiary responsible enough to inherit large sums of money? Could they be led astray or should you put protections in place to make sure?
- Where are the papers: the bank accounts, the online passwords, the utility bills, insurance, auto leasing, credit card statements, and investment statements? Who’s the lawyer, the accountant? Are there other advisors they need to talk to?
If you have the answers to these questions and they make sense, well done! Where you don’t have answers, or if you are questionable about some areas, this is a good place to begin.
At the end of our fire drills, there was always a moment when the tension dissipated. We started goofing around and the teachers moved in to keep us in order and herded us back to our classrooms. Truth told, while we liked to play around during these practice runs, there were valuable lessons being taught and imprinting going on. A tiny voice now resided in our minds waiting for the day it might become necessary to speak up. The day we were always sure would never arrive.
Read more Navigating the Markets articles
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- Protecting investments from higher rates Nov 27
- See your future Nov 20
- Generating income in uncertain times Nov 13
- Purple cows and stock operators Nov 6
- Pay now or pay later Oct 30
- The best laid schemes Oct 23
- This is your captain speaking Oct 16
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