Tuesday, January 1, 2019

Preparing For Life’s Unexpected Events



Without sounding negative or pessimistic, you never know what might be around the corner - good or bad, it could be an unexpected pregnancy, a new job opportunity or sadly you could lose your job, have an accident or get ill and all of these events could have and probably will have a significant impact on your finances. So, are you prepared? And how can you prepare without being paranoid and pessimistic?

Be Realistic
Ok, you don’t plan for illness, and that’s to be expected, nobody does. You don’t prepare for a tree falling on your car - why would you? Well because when one of these unexpected events happen, you’ll know how to deal with it, won’t be so shocked and will hopefully have some money or people or access to cash or the right people to help you through it. It’s tough to focus on adverse and traumatic events until you have to, however, if you do and you can think about what could/might happen, and what you would do about it, mentally walking it through, it can help you to work out what you might need. What would you need if you were going through an illness, personal tragedy, or a natural disaster? How likely is it in your job or where you live that you could suffer a personal injury - read more here? Think about what you would need personally and professionally. What help would you need for yourself and your team family get out of the situation in the best way possible?

Can You Prepare For A National Disaster?
Do you live somewhere susceptible to flooding, storms, earthquakes, hurricanes or tornadoes? If you do, then it is wise to plan for natural disasters. We have seen from the media the devastating effects these disasters can be, and they can also arise very suddenly, so insurance for these events is a must. As well as that, a good emergency kit and five-day supply of food and water are good to have on hand in your home, car or office. It doesn’t have to be anything large or elaborate, but being prepared in this way can make a difficult situation much easier to get through.

Think About The People You Know
Professionally and personally, who do you have in your life who will be willing and able to help you if you need them? Is there a good number of people you can count? Have you helped people yourself in the past when they have needed it too? It doesn’t have to be financially, but do you know people to give you advice, coaching, or counseling? Each person you know will be able to offer something different; some people will be great at providing practical help such as meal deliveries, or personal friends who will stop by your home to help out. Having a support system can be invaluable when an unwelcome event occurs.

What About Your Job?
If you have an accident or fall ill and find yourself having to be away from your job for an extended period, this can add additional stress as you might be worried about your work, your clients and your team. Will they be able to manage without you? If you get a system in place for these kinds of eventualities, this will help to keep your mind at rest, as well as improve your team and employer know that everything will be taken care of. Organizing passwords and organizing workflow enables freedom for you. Don’t worry about it making you easier to replace, share information and cross train your colleagues because if you’re a valued employee you will not be easily replaced, and this attitude is very beneficial to the company, and they will know that. If not for an unexpected life event but for merely going on annual leave, it makes life easier for everyone instead of creating a sense of panic and emergency.  

As well as the work side of things, investing time in building strong working relationships and having a reputation for being reliable is essential should a personal emergency. Making yourself an invaluable part of your business community, making unique contributions and looking for innovative ways to add value will ensure a higher chance of your company supporting you and giving you the time you need, should disaster strike.

On a more personal level, if you are there for your colleagues and others in your network when they need you, then they are more likely to pick up slack when you can’t do so.

Think Clearly
When the unexpected happens, it can be challenging to think clearly and not get caught up in the emotion surrounding the event. Make sure you take care of yourself as much as possible during these times and find ways to alleviate stress and calm yourself. Whether it’s taking long walks, drawing, or just spending time with family and friends, find the activities that will help you remain calm and centered so you can make the best decisions in difficult situations.

Start with an Emergency Fund
The first step for preparing for the unexpected is to have a substantial emergency fund in place. Your emergency fund should be relatively liquid and should cover 3-6 months of living expenses. If you are single, or you are a single-income family, you may want to consider building an emergency fund of up to a year, which will provide security for you and your family should you lose your job and have a hard time finding another one, or suffer an unexpected illness or gap in your earnings.

It is nice to know you have the money there while you are dealing with other issues such as a job loss, illness or anything that might affect your income. And if you don’t think you need an emergency fund, you may want to consider these eight reasons to have an emergency fund. Remember, you do not want to be thrown off by small unexpected expenses.

Money Money Money
A 2017 report from the Federal Reserve found that 44% of Americans have so little savings that they couldn’t cover an unexpected $400 emergency expense. $400 is not that much, that could be something like your car breaking down, boiler repair or a dental bill - all things that are necessary to pay for. It’s essential to prepare financially to the best possible extent. Saving some money, investing in insurance to protect your assets and income, and a creating a comprehensive financial plan can give you more flexibility and help you bounce back from difficult times is vital. Disability, renters, or homeowners insurance and a line of credit that can help you cover unexpected expenses in a pinch is an excellent idea to look into. Also, speak to your HR department about what they can offer you, as an increasing amount of companies are making financial counseling and planning advice available to their employees. Know your employment policies and benefits, as well as your employment rights; know the leave and other benefits to which you are entitled to.  

Do You Have Life Insurance?
It is vital that you have adequate life insurance for your family or your spouse if you are married, and especially if you have children. Life insurance should provide enough money for your family to pay off any debt and live on if you sadly pass away. If you have children, you should get enough that it can help cover the cost of their education. Depending on your circumstances of course, but if your partner doesn’t work or doesn’t earn enough and they will also have to deal with the loss as well as other things, so will need time off work. You and they need to know that they are cared for and make the whole thing as smooth as possible.

Do you need insurance for anything else?
While we have already covered natural disasters, even if you don't live somewhere where your house is susceptible to them, it doesn’t mean you are off the hook. Make sure you have adequate health insurance coverage, and renter’s or home insurance coverage. While this adds to your bills and monthly budget, it will save you in the long run. Remember that accidents do happen and sadly the following costs can add up very quickly which could leave you in debt.

Do You Have A Backup Budget

It’s an excellent idea to sit down and create a fallback budget of the things you could cut back on if you needed to survive on unemployment or if you had another sudden change in your expenses. You can make the plan now while things are good as they can be far more difficult to do when trying to deal with other stuff if unexpected events do happen. It will also be easier to put it into place when and if the time comes. At the beginning of a crisis you may not be thinking clearly, and it helps to have a plan already laid out that you can follow.

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