At the prodding of The Blunt Bean Counter, My Own Advisor recently answered a series of questions designed to test how well his personal finances would stand up to different types of stress. I liked the list and decided to give it a shot myself.
I like to think that I’m very well-prepared financially, but let’s put it to a test. Here are the questions and my answers.
Are you spending more than you earn today?
No. My family spends only about half my take-home pay.
If your income dropped by 50% for 6 months what would you do?
Not much. I would probably delay RRSP contributions until after the 6 months were up.
If you needed more income what would you do?
I would take one of the job offers I get to do work I don’t really want to do, but pays more than I make now. However, I’d rather just live modestly than spend all my time working.
Do you have enough insurance to pay off debts in the case of a death?
I have no debts.
Do you have a Will? Do both spouses know where to find it? Is it up to date?
Yes, yes, and not really. My current will has provisions for what will happen to my children in the event that both my wife and I die, but my children are adults now.
Do you have a list of assets (investments, real estate, other) you own? Do both spouses know where to find it? Is it up to date?
It’s not exactly a list, but it’s all in a spreadsheet.
Do you know you have access to money if you needed it in an emergency (line of credit, savings account)? Do you know what accounts you’d withdrawn from first to avoid more debt? Is the money readily accessible within one day?
Yes to all questions.
Do you know you have a list of emergency contact information for professionals in an emergency situation (doctor, lawyer, and accountant)?
Yes for the doctor and lawyer, but not the accountant. I’ve always spent the time to understand my tax situation, so I haven’t used an accountant. I might do well to have an accountant in mind in case of tax troubles.
My results are reasonably good but not perfect. How did you fare with these questions?