How to better prepare for the unexpected?

Last updated on June 18th, 2020 at 04:20 pm

Photo by Garon Piceli from Pexels

 
In a time of great uncertainty, during this new Coronavirus, many of us are struggling emotionally and financially.

We are scared of the unknown, afraid for our future and especially our finances. Investments have gone down, people lost their jobs and no one knows what the long term implications of COVID-19 are going to be. Tomorrow is unclear and that is a scary place to be in.
 

  • If anything, this pandemic has taught us that it is always best to be prepared.

Having an emergency fund is crucial for anyone and especially people who are not wealthy and do not have families that can help in a crisis.

First and foremost cutting expenses when possible is the number one step to saving up. If you are able to keep your job, that will most certainly help to put aside money for the future. If you lost your income, see if you can qualify for the government programs or unemployment insurance.

Take advantage of mortgage or loan deferrals and find other ways to reduce your spending. The most important thing is to try and not go into debt, if at all possible. If you have investments that have taken a dive, it’s essential not to panic and sell it all right away, unless you have absolutely no choice.
 

  • Set up an emergency fund with at least 6 months worth of your current salary.

Generally speaking, an emergency fund is an account with money set aside for the unexpected. In case you lost your job, something major happened with the health or wealth of you or your family and other emergencies, this is meant to provide you with coverage for sudden expenses. It is also a tool to prevent you from going into debt, and not having to dip into credit cards or loans.

As a Nerdwallet columnist Liz Weston claims, “One of the first steps in climbing out of debt is to give yourself a way not to go further into debt.” Such fund should have at least six months of living expenses to cover you if you lose your employment and keep you afloat while you look for new work.

Start putting money aside, even if you begin with small amounts and build up from there. Open a bank account with high interest and easy access in case of an urgent need but make sure it’s apart from your daily banking to avoid the temptation to take money out.

Set a goal of how much you want to save and set up an automatic monthly withdrawal of funds directly to your emergency fund. If you get a tax refund put aside that money into your fund. Look around your house and sell stuff you no longer need for money you could use in the future.
 

  • Take advantage of automated investment tools.

In addition to putting money for a ‘rainy day,’ you should also be investing and using a financial advisor or a tech platform such as Wealth Simple that can lend you “Powerful financial tools to help you grow and manage your money.” You can start small and work your way up based on your comfort level.

Wealth Simple provides you with smart, simple investing, without the high fees and account minimums associated with traditional investment management. This engine can be used as another way to reach your goals and manage your money without any hassle.

 

  • Get an insurance policy to protect your financial well-being.

On top of having an emergency fund, another great tool to prepare for the unexpected is having insurance. Schedule an appointment with an advisor who can help you figure what type of insurance will best suit your needs. Whether it is life insurance that will protect your loved ones if something was to happen to you or disability insurance or critical illness. All are important tools in protecting you and your family from the unexpected.

Life insurance can preserve the financial security of the people you care about by providing them with a tax-free payment after you pass away. Your beneficiaries will receive a lump sum amount in the event of your death. The type of coverage and the amount you choose will be contingent on your needs and circumstances. The cost of life insurance will depend on your age, gender, health, medical history and lifestyle.

Critical illness insurance is a tax free lump sum payment you receive if you are diagnosed with a serious, life changing illness. This type of coverage will help you focus on your recovery, instead of worrying about expenses and can protect your retirement savings, as well as give you additional benefits such as getting a second opinion and help pay for emotional and physical support.

Disability insurance can help safeguard you and your family from a sudden accident, injury or accident that would leave you unable to continue working and earning an income. If you get injured or disabled during your peak earning years, you and your loved ones can lose the financial protection you were working hard to build around them. This type of insurance can help you build that safety net for you and your family. Disability Insurance pays a tax-free monthly amount based on your regular income if you’re unable to work due to an illness or accident.

 
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If the pandemic taught us any lessons, they are that you never know what can happen and things can change quickly so to be prepared is the smartest way to secure your future financially. If you know that you and your family will be financially impacted if something was to happen to you then the time to act is now, before it ever does.

Use the instruments above to protect the ones you love and make sure none of you are financially impacted if something happens to any of you or the world encounters another new virus. Joking aside, we hope these tools can help you better plan for your future!

#insurance | #lifestyle
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