Always be Prepared for a Knock at the Door
-By Darren Smith
What shape are your finances in? Have you got your house in order and do you undertake a regular refresh? If not, now is the time to take action and close the gap.
Many of us have received a call late on a Friday or early on a Saturday where a family member or friend have asked to come over at very short notice. I don’t know about your household but in mine there would be a dash to spruce things up to be visitor ready.
Even though most things are in order, there is a need to take it to a level above what we may tolerate on a day-to-day basis given other competing priorities for time. This can particularly be the case when you are time poor due to work or life commitments.
Having that little gap or make up time is incredibly important. The bigger the gap between the standard we live with versus the standard we want to present to others, the more stress and effort that is required. It is also important to keep in mind that in some cases we will not get the make up time as the knock at the door is without warning.
The same principle can be used with our personal finances. There is a need to give them sufficient attention regularly so the gap is never too large between what we tolerate and live with versus where we really should have them. Just as we want to be house proud, we need to take a position of being finance proud.
Being finance proud means:
Understanding your current financial position
Having a simple summary as a dash board in case someone needs to act on your behalf
Understanding your spending and where the money is going
Making sure the important things are paid as a priority
Being able to meet your commitments on time
Having key documents and files in a set place that is easily accessed. This includes:
o Wills
o Enduring power of attorneys
o Tax information
o Loan documentation and statements
Ensuring that the above items reflect current circumstances
Ensuring that we are getting a competitive deal on loans and larger expenses at least annually
Having a reasonable emergency fund that we can tap into when the unexpected happens (and it will)
There are situations where we can make up or close the gap such as when going for a loan or preparing for the annual tax meeting.
Sometimes a health event can get in the way and rob us of the opportunity to catch up or close the gap. There are consequences to this. In some cases we will be wasting the opportunity to save and generate additional savings by not reviewing regularly. In other situations where the health event may be more extreme, we will be making it more difficult for our loved ones to sort things out. They will get more stressed and will have less capacity to make good decisions under this additional pressure. This is not an outcome anyone would want.
The regular review and attention to our finances puts us in a stronger position to manage them, understand progress and feel better positioned to meet our short term commitments. The additional benefit is that if you are continually topping up and being finance proud and it should mean less time and stress to maintain the position.
Through the work we undertake around financial literacy, we always encouraging individuals to invest time, focus on what they can control and ensure that where you have a partner, they have a good understanding and you are both on the same page.
What position would your finances be in if the knock at the door happened now?