Your Household Inc
(Consult Gary Brown - mortgage agent in Kitchener, Waterloo, Guelph, Stratford, Cambridge, Ontario and the surrounding area.)
Here is an unusual point of view for you.
Every household should behave like it is a business. This might sound strange to you but I’d ask that you hold that thought until the bottom of this page.
Let’s for a moment assume that you describe your household as Your Household Inc. (YHI). Let’s also assume that you don’t suffer embarrassment by telling anyone of this outside your household!
YHI has a number of similarities with an actual business. Both have revenue streams; individuals within the company; owners; expenses; assets and liabilities. For clarity, examples of an asset within YHI are a house and a car. Likewise, examples of liabilities include a mortgage and a car loan.
Where the divergence will frequently exist between an actual business and YHI is in the area of planning; goal setting and performance measurement. An actual business (either for-profit or not for-profit) will be sunk if these activities are not part of it’s core activities. In the case of YHI, the absence of these activities might be better described as an opportunity cost. In other words, opportunities are being missed by the household.
None of us can predict the future with any certainty.
This is why planning and goal setting is used by a business to anticipate future challenges and obstacles. Measuring progress against goals helps a business decide when new actions need to be taken.
What steps should YHI take to anticipate future challenges?
How does the protection offered by life and disability insurance fit into your plan?
What is your savings/investment strategy – both short and long term?
How does YHI plan for the acquisition of assets? For instance, is a mortgage that is used to purchase a house or refinance other debt simply treated as a transaction? Or, is it part of a larger investment consideration?
The first three questions above can be tackled by engaging the services of a financial advisor/planner. It is a good idea to use the professional services of someone who works in this field fulltime.
In the case of the mortgage conversation, I help by asking questions about your view of the future; your tolerance for risk; your cash flow needs and how a mortgage fits into your present lifestyle. Then I find a product that works best for you.
I’m happy to help whenever you might feel the need for another perspective.