Life Unexpected: Are You Prepared?Submitted by Breakwater Financial, LLC on September 7th, 2017
Life happens, and, when it does, it sometimes has a tendency to get in the way of the things we are trying do for ourselves and our families. The one certainty on which we can count is that life is full of uncertainty, so why aren’t we more prepared? Most people are just a paycheck away from financial disaster, yet the odds of an unexpected occurrence such as a job loss, a medical emergency, a debilitating accident, or even a death in the family are fairly high when you consider them all together. Taken as whole, the question is not if a financial disaster will strike, but when.
The issue really comes down to individual responsibility and common sense foresight. Stuff happens when it is least expected it and it is up to the individual to guard against possible financial consequences. Here are five essential steps everyone needs to take to prepare for the unexpected:
Establish an Emergency Fund
Everyone should have enough money set aside in a short term savings account to cover six to twelve months worth of living expenses. And, no, a credit card is not an emergency fund. In fact, one of the primary causes of bankruptcies is the use of credit cards to fund emergency medical expenses or to pay living expenses in periods of unemployment. It may take a few years to accumulate it, but it should take priority over other savings goals. Budgeting and discipline are the keys to sticking with a savings plan.
If you own it, you should insure it: Everything, from your home, your car to all of the possession inside both. If you rent, you can still insure your possessions. If you own a home, make sure that you insure for full replacement value indexed for inflation. If your car is under four years old, make sure you have collision coverage, even if you have to select a high deductible.
Insure your Health
If you don’t have employer provided health insurance, you need to purchase your own. If you think you’re young and invincible, stop it, and buy high deductible coverage for major medical expenses. You can also contribute to a tax deductible Health Saving Account to help pay your deductible. If you have a pre-existing condition, check with your state’s high risk pools.
Insure your Biggest Risk
Before you turn 65 you have a one in five chance of suffering a long term disability that will prevent you from working for more than 90 days. If your employer doesn’t offer long term disability, then you should look into some individual coverage. Not everyone can qualify for it, so if you do, then you should buy it.
Insure your Life
If you have someone who is dependent upon you for their financial security, then it is an absolute no brainer. Not only is buying life insurance to protect family members a demonstration of unconditional love, it is just the responsible thing to do. If you’re young with no dependents, at least do the responsible thing and make sure that you don’t burden others with your final expenses and unpaid debt. Plus, you will, someday, likely have a family, and the time to buy life insurance is when it’s cheap and when you are healthy enough to qualify for it.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2016 Advisor Websites.