Preet Banerjee is a well-known Canadian personal finance and investing expert, and the author of the personal finance book Stop Over-Thinking Your Money!: The Five Simple Rules of Financial Success.

Banerjee’s 5 Rules for Personal Finance Success are as follows:

  1. Disaster-proof your life.
    • Expensive emergencies can derail you, so protect yourself with disability insurance, life insurance, and an emergency fund.
  2. Spend less than you earn.
    • Without money left over at the end of the month, you will never have anything to save. This is a cornerstone of financial security.
  3. Pay down high-interest debt.
    • Carrying a $5,000 balance on a credit card will cost the average family $70,000 in interest over their working career! Might be shocking for some when elaborated this way.
  4. Read the fine print.
    • Read everything that you put your signature on. The smaller the fine print, the more likely it is to make you reconsider.
  5. Delay consumption.
    • Beyond a house, car and education, we shouldn’t be borrowing for much else.

While all are important points, I would like to further elaborate on the Rule 1: Disaster-proof your life.

Many people focus their financial planning around retirement; however, Banerjee argues you have decades to figure that out and you know when it is coming.  You don’t know however, when you are going to die or if you are going to be disabled, unemployed or be subjected to a disaster, so your most urgent financial task is to immediately protect yourself with insurance and emergency funds.

  • Disability Insurance
    • Your number one asset is your ability to earn an income. What would you do if your income was gone tomorrow?  You must protect it with disability insurance, because one in three Canadians will be temporarily or permanently disabled before age 65.
    • For those covered with a work plan, it is important to understand your plan. Many people are surprised to realize it only will replace a small portion of your income or only cover you for a couple of years.  This is where individual supplemental disability insurance can come into place.
    • Don’t delay starting the process of obtaining disability insurance as it is easiest to obtain when you are younger and healthy. Don’t rush through the process either, work with an experienced agent to help you understand your options.
  • Life insurance
    • If you have dependents and your death would leave them financially strained, you need life insurance.
    • Make sure to purchase a product which is fully underwritten at time of purchase.  There are policies that ask very few questions at time of application and some types of insurance policies, like mortgage life insurance, may even underwrite you at time of claim.   After your death is the worst time to find out you didn’t qualify for coverage. Here is a past blog we wrote about such topic: The Hidden Risk of Simplified Insurance – SecurePlan Insurance Solutions
    • Term life is more affordable, when you are younger it is the preferred option. When you are young that is the time life insurance is most needed, you won’t have built up assets yet, thus expensive whole life insurance is not necessary.
  • Emergency Fund
    • Three months of expenses in a high-interest savings account or cashable GIC is recommended.
  • Wills and Powers of Attorney
    • If you are married and/or have kids, you need a will.
    • Even if single with no dependents it is important to have a Power of Attorney for Finances and a Power of Attorney for Health Care or Living Will. This is so someone can continue to pay your bills and deal with financial matters and someone can make medical decisions for you if you are unable to do so.


“Many people think they need a perfect plan before they can start overhauling their finances, but making a perfect plan is so daunting a task they never make a start.” – Preet Banerjee

The above is so very true when it comes to insurance as well.  I receive too many calls from someone looking for coverage after it is too late.  The best time to obtain coverage is when you are healthy and don’t have any pre-existing health conditions.

This book is very aligned to my personal beliefs when it comes to financial success, and it was refreshing to see that we were already following these five rules as a family and in my business.   Given our expertise when it comes to insurance, we felt that it would be worthwhile to expand on Rule 1, however overall, this book is a great intro or refresher on financial basics.  I would recommend for anyone.

Sometimes you make progress by eliminating risk.  Think about this, you work hard to earn an income which in return allows you to purchase a home, put food on the table, travel and invest towards retirement.  Did you know that one year of disability will often wipe out 10 years of savings?  That can be financially catastrophic for many and may prevent someone from achieving their own financial success.

When it comes to insurance, everyone knows that the risk is real, however not everyone takes proactive steps to prevent the financial loss that can come along with an illness or premature death.  We enjoy helping others better understand their options on how they can protect themselves, their business and their loved ones by insuring their greatest asset, which is their ability to earn an income.