Video: Scott Pape's protect your finances money challenge
video about protecting your finances
Welcome to the Barefoot Investor's 60, 60, 6 challenges -
Helping you get more money smart by the minute.
What would you do if disaster struck you or your family?
Now, everyone thinks it's not going to happen to them but I'm
here to tell you, it can happen to you. When my wife and I bought
our dream home we never imagined that 18 months later, we would be
standing in front of a smouldering pile of ash and rubble. And all
our worldly possessions were lost within it.
No one plans to lose their home in a bushfire, just like no one
plans to be diagnosed with a terminal illness.
60 seconds challenge
So this challenge is simple but hard. I want you to picture
yourself off work due to a major illness or injury. Now picture
your family. What are they feeling? Would they be prepared or
would their financial stress just add to their pain?
60 minute challenge
See, when disaster strikes the last thing you want to worry
about is how you're going to finance your misfortune. A Legacy Box
is somewhere safe to put every financial document your family will
need in case you're ill, or if the very worst happens. It'll help
make a very difficult time that little bit easier to manage.
Here's what I suggest you put in it: A summary of your financial
situation, including things like any shares you own, loans, and
Your bank account and super details, insurance policies, birth
and marriage certificates, the title deeds to your home and your
Will, along with any funeral instructions or final wishes.
Now, keep your legacy box in a fire resistant, waterproof safe
at home. And I'd even go one step further, and also keep a full
copy of these in a safe deposit box at your bank. You just never
know when you might need them.
6 day challenge
It's important to make sure you have enough insurance on your
most valuable asset: your ability to earn an income. That's why you
may need income protection insurance, total permanent disability
insurance or TPD and life insurance.
Now the good news is that in most cases you might be able to get
these types of insurance through your super. So, call your super
fund and ask the following questions:
- Number one, 'what insurance do I have'?
- Number two, 'what amount am I covered for'?
- And, Number three, 'under what circumstances would I receive a
Now, you may find that you already have some insurance, but is
it enough? So grab a piece of paper and draw a line down the
middle. On one side write down what you own, and on the other what
Now, you need enough cover to pay off all your debts and if you
have kids, provide another income until they're off your hands.
Insurance calculators can also help you work out how much you might
Now, the advantage of buying insurance through your super fund
is that you're paying with pre-tax dollars, and it might also be
cheaper than going direct to an insurance provider. Just make sure
you compare costs with at least two other insurers or super
Also, be sure to ask what's excluded and what's included in your
Finally, the cornerstone of my wealth building strategy is to
build up at least three months living expenses in a high-interest
online savings account that I call 'Mojo Money'. Remember, if
you've got Mojo, you're ready to deal with life's ups and downs.
Because I've found that people who have an emergency fund don't
actually have financial emergencies!
Last updated: 15 Aug 2016