The Simple Financial Check-In You Need

On this episode of the Canadian Money Roadmap, Evan walks through his semi-annual "full financial picture" review process — a simple spreadsheet exercise that tracks net worth, insurance, and estate planning documents — and explains how to use it as a starting point for couples to get on the same page about their finances.

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Transcript

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In today's episode of the Canadian Money Roadmap, I'm going to talk about the simple thing that I like to do when tracking my money every six months to a year. It's the middle of the year, so I want to check in with it right now to make sure that I know exactly where all my stuff is. And so I can have a conversation with my wife to make sure that she understands everything, even though I'm the money person in the household. So this is a short but sweet but really practical episode of the Canadian Money Roadmap, and let's get into it right now. I find that most people have a rough idea of how they're doing financially. Like even if you're someone that's really engaged with your finances, you're probably picking up on little bits and pieces here and there, like you know, how much is in your bank account. Uh, you probably have a decent idea of how much is left on your mortgage, maybe what your investments are worth, things like that. But very few people actually have everything all in one place so they can actually see it. Kind of like having a running net worth statement. And uh even fewer than that, like the people that are actually doing it, fewer couples. Um, I'm speculating here, but I think it makes a lot of sense. Uh, few couples are actually talking about this stuff together. So there's often a money person in a couple, and oftentimes that money person holds all of the keys to their financial life. They probably have all the relationships with the individual, they know where the accounts are, they know how much is in them, how much they're regularly contributing or paying down the debts, all those different things. However, that person who's not in the loop can really feel uh separated from it, even though that's not their primary area where they feel confident or where they want to spend a lot of their mental energy. I find that it's really, really important to have both people at least on the same page of what you have, what you owe, and what you're doing. And so I like to fill in a spreadsheet that I made. I call it the full financial picture. You should be able to get it in the description. Uh, but you can also make it, you don't have to buy mine or do it the way that I do it. But that way, I just have a spreadsheet that shows our entire financial life in a couple of different pages on a spreadsheet. It's not fancy, but it creates some really valuable money conversations that uh that I can have with my wife Becky. So we're in the middle of the year and it's summer and no one's thinking about money stuff. But why I like to do it in summer is because January can kind of feel uh a little bit full, December even more so, with Christmas and the holiday season there. You know, the idea of goals, resolutions, making contributions to investment accounts, dealing with tax slips, all that kind of stuff. New year, a whole lot going on in our personal lives. Financial stuff can just feel like another thing that's uh kind of piles on. Spring is kind of taxes, uh, and thinking about that and getting everything organized for that. Um, the end of year, of course, can feel rushed. So who knows where you're at, but summer can just be a bit of a quieter window where you can kind of step back and take a look at things a little bit more objectively. This is not an activity where you're necessarily going to be leading to a bunch of changes, perhaps, but this is just creating awareness. And half the battle with one's financial life is just being aware of what you have going on. I know it sounds silly, but even again, if you're really engaged with your money, it's easy to forget, oh yeah, we actually do have a new mortgage provider. Oh yeah, that interest rate did change on that loan that we have. Oh yeah, we are contributing more to our TFSAs, right? All these things can change often throughout the year, especially if you're only doing this every few years. But if we're checking in more regularly, it's easier to stay on top of some of the changes that could happen. So in my spreadsheet, we've got an area for going through all of your different accounts. So I've got my cash, my savings, um, some investment accounts, emergency fund, things like that. Um, we list some of our assets, so the value of our house or car. I'm incorporated, so the value of the shares based on how the business is doing at any given point. And then the other side of that coin is your liability, so the things that you owe. I also like to list in there my lines of credit and the amount of credit that we have available there, even if we're not using it. But keeping track of that is is potentially really helpful. Um, you're having your mortgage balance in there, you've got a vehicle loan, things like that. And uh, so then we can have a quick summary of what our net worth is at any given point. Now, the cool thing is the way that I've done the spreadsheet is that it breaks down liquid and fixed assets. And so it's a little bit easier to see the changes in net worth for those specific things. Fixed asset net worth is a little bit tricky because inevitably it's just based on whatever someone is willing to pay you for it at the time that you're selling it, right? So, like what's your house worth? You could say any number, but as soon as you put a for sale sign up and someone is actually willing to write you a check for it, that's when you kind of determine what it's actually worth. Same thing with a business, same thing with a car, all that kind of stuff. So the liquid side of things is probably more important to be on top of. Who knows, depending on your situation? But it's one of the things that you can be a little bit more accurate with because you already have the cash and you know exactly what the dollar value is. Just having an area where you can track your net worth. So, again, what you own, and then on the other side, what you owe can help you see where your changes in your finances or the efforts that you're putting in are actually making a difference. So are your liabilities actually coming down? Are your assets going up? Is it predictable? Is it more than you thought? It can be very enlightening. And again, I'm pretty aware of my financial picture, but updating this every six months to a year, I've seen some changes that I was pleasantly surprised with. So that's great. Another thing that I recommend putting in here is your insurance. So all the different insurance policies that you might have. So life insurance and disability insurance, in particular, property insurance and health insurance, things like that. Maybe not as critical, perhaps, but you could put whatever you want. Again, my spreadsheet has areas for all of the different types of insurance that you could have in there with all of the details when you reviewed them last, who the beneficiaries might be, the annual premiums, all that kind of stuff. You can list that in there. And I'm going to talk about that more in a second. And then at the end, um, having an estate planning overview. So just making sure that you've created your will and having a power of attorney document and uh perhaps a healthcare directive, these things are really important to have in place. If you have a spouse, if you have kids, if you have assets at all, you should have a will. You don't necessarily need to have life insurance, you know, those kind of things when we're looking at the long term. In many cases, if you've got young children at home and someone's relying on your income and you've got some debt, perhaps, yeah, that's uh a really critical piece to your long-term planning. However, having those documents in place can make sure that your wishes are actually being followed. So the reason you want to review that on a semi-regular basis is uh for us, we actually did have our uh will reviewed, but our lawyer that we had done our will with originally, she's since retired and she closed her firm. And so we found a new lawyer to have a review of our existing documents. And uh it was actually a really valuable process to go through that and think about all those things again because it was about five years since we had last done it. But in that process, we found that we didn't really have to make any changes to it. However, our original copies of our will now exist at a different law firm. So having that written down somewhere, um, just in case somebody needs to find it, can be very, very helpful. So to have all these things in one place, I don't recommend putting account numbers in here, obviously just for security reasons and things like that, but just general names and institutions uh would be really helpful to put in a spreadsheet like this. Okay, so when it comes to updating all of this stuff, first step, go through, update the numbers. So open up last year's version. I usually duplicate it so I can keep all the different versions. So I duplicate it, and then I can update the uh the numbers from the previous year. So find the account balances for each one, including the mortgage, the debt balances, add any new accounts. So, for example, I added a new savings account going through our savings ladder challenge. I hope some of you are on board with that. Um, if you don't know what I'm talking about, head over to our Instagram or our YouTube page and you can find all the videos. We're in the middle of it here. We're almost by at day 50 pretty well by the time this comes out, maybe in the high 40s by the time you see this. But, anyways, I added a new savings account that I didn't six months ago. So I wanted to add that into my full financial picture document to make sure that it is trackable there. I also changed how I save for my taxes, my quarterly tax payments. And so I opened up a different savings account, a different institution. So I need to close one, open up another one. I wanted to have that listed in here as well. So make any of those changes to the different accounts that you have. We renewed our mortgage and we changed lenders. So changing that, we've got a new interest rate, we've got a new payment, updating that in there as well. It's a lot of little things like this that they're very easy to forget about. So all of those little details can make having an understanding of your financial picture a lot easier. So adding anything new, getting rid of anything that doesn't exist anymore, updating any insurance coverage. Um, we also have applied for some more life insurance again, based on our situation changing uh since we originally applied for our initial insurance policies. So that's another new thing that we need to add into our uh spreadsheet here. But then you can start looking at some of the changes. What are the things that increased over time? What are the things that have declined? Is debt going in the right direction? Do we have more cash than usual? Is that a good thing or is that a bad thing? Um, do we have more fixed assets compared to liquid assets? All these kind of things. You can just start to take a peek and compare even within the current period, but also against different periods of time to see how things are changing. Right. So I think that's the part that really moves the needle a lot is actually looking for the changes, not just the totals. The totals don't really tell the story necessarily. The changes can really point to the efforts that you're putting in and the focus that you're putting in. And in some cases, you might want to take a step back and say, oh my goodness, we're not putting enough effort into paying down our debt fast enough, or we're not actually saving as much into our long-term investments as we perhaps thought we were. And so seeing those changes can really guide the next choice and the next decisions and the areas of focus that you have with your money. The big number of your net worth isn't the most important thing. And it's, you know, you don't have to have a million dollar net worth as a goal in and of itself, but the contents or the components of your net worth can be indicative of what you actually have going on, not so much the big number on the front of the page. And so, since I'm the quote unquote money person in our household, um, I usually am the one to take the time to do all the updating of all this stuff. Beggie gets me the numbers that are relevant to the accounts in her uh in her name, and uh I make all the changes to the spreadsheet there. But then I like to use this as a jumping off point for the uh some regular conversations about money, just because it's easy to be the only person that has all of this information, and then I can start making judgment calls uh based on what my priorities are and you know, because I have the understanding of where everything is and where we're trying to go. But if uh maybe this is more relationship advice than money advice, but we're trying to do things together as a household, it's good to have those conversations about priorities and objectives and then fitting the details of one's financial life to that, right? So in our conversation, we can talk about, you know, do we feel good about where we are? Like just an overall feeling. Does that feel okay? Is there anything that was surprising? Uh, is there anything that either one of us is necessarily worried about? Do we need to simplify anything? Are we overly concentrated in any one thing? Those are all sorts of different things that we could highlight from just having that general overview, but it's just a starting point to have conversations with each other about money, about where we're at, and then together try to figure out where we're trying to go. And then do we need to do anything different? I don't think that each person in a couple needs to have equal interest in personal finances, but both people should have enough of an understanding to know what exists, and then perhaps where to go for help. So if you use an investment advisor or an insurance broker or an accountant or a lawyer or anything like that, all the different contacts, having those listed in there can be great. And then just having a reminder conversation about who all these people are and when you want to reach out to them. Another thing I really like to do in this process is reviewing the what-if scenario, some of the big ones. This is something that we like to do in our financial planning as well. So when we work with new clients, we'd like to do some stress testing to see what's all going on, just so everybody's on the same page. But this is something that you can do yourself on an ongoing basis too, just like I'm discussing here in this semi-annual review. So things like my wife stays at home, so she doesn't earn an income. But uh, since I have the income, we can talk about the what-if scenarios of what if I can't work for whatever reason. And so then I can talk about okay, this is how much disability insurance we have, this is the insurance provider, this is who you can contact if I'm unable to make a claim myself in that case or whatever the situation is. Again, I am probably going to be the one to stay on top of how much coverage we have and all those kind of things. But Becky should have a good handle on the fact that we have disability coverage if that should happen, and then who she might need to call if she needs to get some help with an application or something like that, if I'm unable to do it myself. Then again, the other extreme situation, again, tied to the insurance. What if I die? What if both of us die? You know, all these different things, how much life insurance is in place? What would that cover if that were to happen? What would you do with a big lump sum of, in our case, millions of dollars of uh life insurance coverage? These are the people you can talk to. This is how we can pay off the debts if need be. This is how you can stay in the house. Just having these big conversations about the what-ifs and to perhaps reassure that one, that we've thought about it, two, that we've planned for it, and three, that we're gonna be okay. Major expenses or unforeseen costs, talking about those in the context of an emergency fund and how you might cover that, whether it's with a line of credit, whether you have some extra cash sitting around, whatever it is, we can just talk about what the plan is for that, and then perhaps how we're gonna cover some short-term spending things like the upcoming vacation or whatever the case may be. You can kind of take this another step further. It might be a little bit overwhelming perhaps, but just some high-level conversations about if something were to happen there is like how can you log into these things? How do you share some passwords? You know, um, which bills are automated already, which ones do you have to manually pay? Whatever. There, there's some stuff here. I don't include that in the spreadsheet necessarily, but these are the times where you can have some of these conversations. This maybe gets into the uh a little bit more heavy than you're anticipating for a summer vacation about money at this time of year. But anyways, it's it's always good to have these kind of things so that uh everybody's on the same page when it comes to what changes might need to happen or how to take over in any sort of adverse situation. So, again, going through those what-ifs, if you find out a situation where neither of you has a really good handle on what you have to cover that, you know, um, that critical event, like a disability or an unexpected death, something like that, might be time to review the insurance that you already have and see what other options are available. In some cases, we've talked to a few people recently where we've actually recommend that they reduce or cancel some of their insurance because the reason they bought it in the first place doesn't exist anymore. So someone um had a mortgage insurance policy, so to cover uh off the mortgage if they were to pass away while they're still paying it off. But they have since long paid off that mortgage, but they still have the insurance in place. So they're at the stage of life where they've saved enough money to cover their needs for the retirement years, and the mortgage isn't paid. Uh sorry, the mortgage doesn't exist anymore because they've paid it all off. The case for insurance for that specific use case probably isn't there. And so in some cases, we could recommend that they cancel that policy. In our case, the opposite was true where we moved and we actually had a larger mortgage compared to when we initially bought our life insurance. So we actually decided to buy more because now we have two kids as well, things like that. So things can really change, and so you need to decide if your coverage is accurate, if your beneficiaries need to be updated. So we've seen situations where um a client had a life insurance policy, but they weren't married yet. Um, and so their parents were their beneficiaries, and now they've been married for a few years, but they forgot to update the beneficiaries of those life insurance policies. So you probably want to change that to your spouse as soon as possible, right? All sorts of different things like that. So a good thing to do with this short mid-year review is to create a maybe a short little action list, perhaps, and maybe even just do it without thinking about it. It doesn't have to turn into a big ordeal or anything like that. But to avoid turning this conversation into a list of say 20 tasks that you need to do and you end up doing none of them, just pick a couple of things that can move you in the direction of having more clarity and more confidence with your money. So you could do something like updating a beneficiary that's incorrect, or consolidating some old accounts. You've got savings accounts in multiple places, just consolidate them, cancel the other ones that you're not using, maybe increase your emergency savings, locate your original insurance policies or your will or your power of attorney. Maybe you should just book an appointment to speak to a lawyer about those things and get them set up in the first place. You could take a look at your disability coverage at work to see if you actually have enough. Most people don't. Um, you could update your retirement projections. If you've never done that before, that would be a great opportunity to look into that. You could log into your bank and make sure that you have all of the accounts listed that are in there. People often forget about little bits and bubs of money that they have kicking around. It's better to forget about money than it is to forget about credit cards or things like that. But uh making sure that everything is squared away is a great little action that you can do to make sure that you're ready to go for the rest of the year. So, what we don't want this to be is an excuse to constantly check in on your investment performance and be constantly updating your spreadsheet. It's like, oh, I got million dollar net worth now, and then tomorrow you don't because something happened in the markets or whatever. You don't want to do that. This is not something where we're trying to achieve any sort of figures there necessarily, but and it's also not a full financial plan, right? So it's not going to be indicative of the optimal next actions with your money. It might point you in that direction naturally, but this is not kind of a replacement for a financial planning exercise. It shouldn't be used to compare yourself to others. Again, I'm not here talking about my situation because mine is very different than most people that are listening for any number of reasons. Um, I just don't think it's particularly helpful, even though I always find it interesting when uh, you know, content creators have uh their personal financial life uh out in the open. That's not what I'm here for, and I don't want to create a comparison scenario. I don't think that's helpful whatsoever. This also isn't uh a reason for both people in a couple to suddenly have to become financial experts or have any expectation of that. It's just a checking in and making sure that there's no obvious gaps in anyone's knowledge or confidence of what they have going on. I've talked to a number of people. Um I'm thinking of some widows perhaps, where their husbands had uh been the money person and then when they passed away, they're left kind of picking up the pieces and trying to figure out where everything is and why it was doing that and who all these people are. If you can do those things in advance, everybody wins and everybody can kind of be part of the conversation a little bit more, but you don't have to be an expert in all things finance to be able to just have this check-in on a semi-annual basis. It's also not a competition to increase net worth as quickly as possible. You know, there could be some actions with your money that could have, you know, better use cases. Again, that comes down to the financial planning priority here. So the the purpose here is just to reduce uncertainty and improve communication. That's all that we're trying to do here. So, a simple version, if you don't want to have a spreadsheet like mine and you want to do this yourself, you think it sounds interesting, but maybe a little overwhelming, here's what you can do. You don't even have to do a spreadsheet. The idea of a spreadsheet is kind of freaks some people out. Uh so what you can do is just get a piece of paper and you write down everything you own, all the different accounts, house, whatever, not all the individual items within your house, but just like the big stuff and then the financial accounts. And then number two, what you owe. So if you got a mortgage, if you got a car payment, if you got uh line of credit, anything like that, just write down what you owe. Some details in there would probably be helpful. Number three, what protection you have, so the different insurance policies that you have in place. And four, who to call and where everything is. So all the different professionals in your life that might be relevant to any of these different financial matters that you have. Okay, so then when you're updating that, so if you have just that simple version, you can just answer three questions. What's changed? What are we concerned about, and what do we need to do next? Pretty simple. You can make it as complicated as you want from there, but if you have conversations around those areas, so just understanding what you own, what you owe, what protection you have, who to call, what has changed from the previous year, what are we concerned about, what do we need to do next? Boy howdy, you are going to be so far ahead of the curve as far as planning your financial life with a partner. That would absolutely be fantastic. So part of financial confidence, uh, you know, it doesn't necessarily come from knowing exactly what will happen next because no one knows what's going to happen next. It's more so gonna come from understanding where you are today, knowing what protections are in place, and making sure that people you love would know what to do if life changed unexpectedly. So I hope you'll give this one a try and uh yeah, just have a quick check-in with your financial life and check in with your spouse about your financial life, especially if you're listening to this podcast. You're probably the money person in your household. And so take this opportunity here over a summer, grab a nice cold beverage, sit down the sit out on the deck. Maybe it depends on uh how the conversation is gonna go. Might change the the beverage of choice, perhaps. But uh, anyways, have some fun with it, keep it light, but just be intentional with your money. I hope you enjoy this episode of the Canadian Money Roadmap, and we will catch you next week with another episode. Take care. The contents of this podcast do not constitute an offer or solicitation for residents in the United States or any other jurisdiction where Evan Newfeld, Cedar Point Wealth, or Sterling Mutuals is not registered or permitted to conduct business. Mutual funds are provided through Sterling Mutuals Inc. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus carefully before investing. Mutual funds are not guaranteed, their values fluctuate frequently, and past performance may not be repeated. Financial planning services are provided by Evan Newfeld through Cedar Point Wealth and are not the business of or monitored by Sterling Mutuals Inc.