Last week, I mentioned that two of the clear differences between our current economic crisis and the Great Depression are the interactive ways we now communicate and the staggering amount of data that is literally at our fingertips via the Web. Collectively these phenomena contribute to what I termed the, “data invasion”, meaning that, unless we have a way to filter, simplify, and personalize financial information we will probably not be much better off than they were in the 30′s… sort of dazed and confused.
In discussing the topic of Financial Wellness with the HR Director of a prominent Silicon Valley tech firm, she commented her employees had an almost universal reaction to the economic fallout of 2008… they were more or less frozen. That is, they didn’t know what to do, therefore did nothing and were financially stuck. In fact, she noted that they still are. This is precisely what happens when we don’t have a plan or framework to help us process the inevitable unpredictability of our financial life.
As a specific example, I’ll use what most of us would agree is a complex financial topic… Estate Planning. Responding to employee questions from corporate Estate Planning workshops over many years, common misconceptions about Estate Planning include that it only is a pertinent topic for wealthy people or that it is something that only needs to be addressed by the elderly. Both of these assumptions are just flat out incorrect and, of course, create barriers to take needed action.
So how can we build a simple Estate Planning framework that will help create the momentum we need to move forward? Start with the broadest questions. There are the three basic components that need addressing.
- Living Care – I’m still alive but I need care and management of my financial affairs
- Dependent Care – Whether alive or dead, I can’t care for those who depend upon me, who will and how?
- Assets – Who gets what and when?
These high level broad questions are the essence of Estate Planning and for that matter, building helpful frameworks. For example, if you don’t have documented, written answers to these Estate Planning questions, it is hopefully somewhat disturbing and should spur you to want to know the next steps. I recommend going one step further to own and internalize the required actions. How about, “whether alive or dead, I can’t care for my daughter, Tess… who will and how?”
Next week, a framework to help us with money management in tough times.
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