Financial security assessment – a self-test:

A financial security assessment of your family’s capacity to deal with a health or well-being crisis that could impair your ability to fund financial needs for the immediate- as well as for the longer-term – should be undertaken regularly, to satisfy yourself (and them) that their greatest concern will only be recovery from the impairment.

person at computer screen undertaking a personal financial security assessment - screen shows graph and tables of words and figuresWhy is a financial security assessment necessary?

Consider the financial implications for your family if you are not certain as to their situation in the following circumstances –

If your family’s principal income earner meets with a sudden and unexpected accident, illness or death, how would the family survive?

Not just the next three years, or thirty years – albeit that those terms are very important – but how about the next month, the next three months or the next year?

If there is cash in the bank (or even a pre-arranged line of credit) will this event mean that access is not readily available?

How is financial security defined?

Financial security refers to the peace of mind you feel when you aren’t worried about your income being enough to cover your expenses. It also means that you have enough money saved to cover emergencies and your future financial goals. When you are financially secure, your stress levels goes down, leaving you free to focus on other issues. (See Accounting Software company QUICKEN website – for that definition; and for their explanation as to what can be achieved to attain financial security.) 

A self-test assessment (that should alert you to any need)

We recommend that an assessment of the financial security of you and your family be undertaken on a regular basis – and we offer the following Table to alert you to areas in your financial planning that require attention, for the well-being of all concerned within your family.

Answer the questions in following: if you answer ‘no’ or ‘don’t know’ to any of them you should speak to a financial planner as soon as possible:

Test your financial security about.. Yes No Don’t know
Can your family access sufficient cash to meet household expenses and medical/ funeral costs for the next sixty (60) days?      
Can you indicate without much thought just how much would be required for the above purposes?      
Do you hold bank accounts in individual names?      
Do you have a valid and current Will?      
Does your Will provide for Testamentary Trust(s)?      
Has your Will been structured in the context of a formal Estate Plan?      
Does your spouse/ partner hold a term life insurance policy on your life?      
Do you have Term Life insurance cover?      
Do you have TPD insurance cover?      
Do you have Income Protection/ Salary Continuance insurance cover?      
Do you have Trauma/ Critical Illness insurance cover?      
Do you know who owns the above policies?      
Have you reviewed the adequacy of the amount of cover under these policies within the last two years?      

The Continuum Financial Planners Pty Ltd team is available to help

Unless you have answered Yes to all of the above questions you need to fine tune your financial preparation: we suggest that you meet with a Continuum Financial Planners’ adviser for a review or evaluation. You can arrange a meeting with one of the team by phoning 07-34213456; or using the website contact us facility : remember – ‘we listen, we understand; and we have solutions’; and we deliver ‘personalised, professional wealth management solutions’.

This article was first posted in November 2009: it has been occasionally refreshed/ updated, most recently in February 2020.