September is national preparedness month. Given today’s uncertainties this might have a whole new meaning for many people especially when it comes money matters. How you build your financial readiness doesn’t have to be complicated.
What is the first level of financial preparedness?
It starts with having two types of emergency funds. The first is for unexpected expenses such as new tires on your car or needing to replace home appliances. The second one is for a loss or reduction in income. The emergency fund is key to keeping your budget on track for most any financial crisis.
How can couples increase each other’s financial preparedness?
Be certain that each person knows the family finances so if the person who is primary can’t do it, the other person isn’t left in the dark. This includes bill paying, investments and other financial matters that might need attention. It is also important to share all employee perks so no benefits owed are missed during a difficult situation.
What role does having life insurance play in being financially prepared?
Life insurance is the best method to financially protect your family in the event of a catastrophic event. Without adequate life insurance, a spouse might need to significantly change their life which is just another hardship for the family to endure. The amount you need will depend upon your current financial situation and will also be driven by what you can afford.
What else is critical for people with families?
Having a complete estate plan that includes a will, medical and financial power of attorney and medical directives is extremely important. If children are involved, naming guardians and establishing trusts is a step that should be included as soon as the first child is born. Situations can evolve quickly and having all of this done in advance ensures that everyone’s wishes are known.
What is a next level step to take to be financially prepared?
If you truly want to be financially prepared, then having a working budget is the most important step to take. The budget is a tool that allows for next level planning so that if any situation occurs, you will be prepared to deal with the financial consequences. The budget is as much a planning tool as it is monthly tool to keep you from overspending.
How else can people improve their level of being prepared?
A great step to take now is to assembly your financial team so you can call an expert when you need one. This team should include an attorney, a financial advisor, an insurance agent and perhaps even an accountant if your financial situation warrants that level of advice. Advance planning will allow you to make a good choice for who should be on your team.