Life Comes at You Fast…Are You Prepared for Financial Surprises

Blog image for Life Comes at You Fast.

Are You Prepared for Financial Surprises?

A job loss, an illness or an unexpected expense are not things we typically like to think about. Having a plan in place can help reduce your anxiety and protect you financially when the unexpected happens.

In these times of increased uncertainty, there has never been a better time to make sure you are prepared for unexpected financial costs. Setting up a rainy day fund, budgeting for home repairs and maintaining appropriate types of insurance are all steps you can take to insulate yourself from financial surprises.

Rainy Day Fund: Most of us never expect to lose our job, but in the current environment this has become a reality for millions of people. Set up a rainy day fund with 3-9 months of savings in order to cover living expenses. If you don’t have enough savings now, allocate an affordable portion of your monthly earnings to build up your fund. Make sure your rainy day fund is in a highly liquid investment (high interest savings or money market account) and separate from your retirement and investment accounts. 

Home Repairs: While home ownership may be rewarding, it can also come with costly surprises. Unfortunately, when the unexpected happens costs are typically in the thousands, if not tens of thousands. Experts recommend setting   aside 1-3% of your home’s value on an annual basis in order to have a fund ready for routine and unexpected maintenance. In addition, regardless of your personal financial situation you should maintain an appropriate amount of home-owners or renters insurance. 

Health Expenses: If health insurance isn’t readily available through your employer, it can be tempting to ignore this added expense. The reality is that one major health issue could be financially devastating. There are numerous private plans available in the health insurance marketplace. Many individual states now also offer exchanges to facilitate the purchase of affordable health insurance. 

Disability: A prolonged illness or disability can result in significant lost wages if you are unable to return to work. Short-term and long-term disability insurance can provide a safety net to replace lost wages in the event you have a serious illness. Many employers offer disability insurance as part of their benefits package. If not, there are ample private options available. 

Maintain Credit Availability: Even with the best planning, we can still find ourselves in an emergency situation where we need quick access to funds. Having credit available provides a vital backstop if no cash options are readily available. Just remember to pay down this debt as quickly as possible once you get back on your feet financially.

Thanks for checking out the blog. Remember prior, proper planning can prepare you for the unexpected!

Gregory Armstrong, CFP®

This material is for general information only and is not intended to provide specific advice or recommendations for any 
individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive
outcomes. Investing involves risks including possible loss of principal.   This material was prepared by LPL Financial.    Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and
broker-dealer (member FINRA/SIPC). 
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.

Share This Article


You May Also Like

Asset Protection in Estate Planning

You’re beginning to accumulate substantial wealth, but you worry about protecting it from future potential creditors. Whether your concern is for your personal assets or your business, various tools exist to keep your property safe from tax collectors, accident victims, health-care providers, credit card issuers, business creditors, and creditors of others.

Read More »

Estate Planning: An Introduction

What estate planning means to you specifically depends on who you are. Your age, health, wealth, lifestyle, life stage, goals, and many other factors determine your particular estate planning needs.

Read More »

Taking Advantage of Employer-Sponsored Retirement Plans

Employer-sponsored qualified retirement plans such as 401(k)s are some of the most powerful retirement savings tools available. If your employer offers such a plan and you’re not participating in it, you should be. Once you’re participating in a plan, try to take full advantage of it.

Read More »

Properly Insuring Your Business

No matter how careful you are in running your business, accidents happen. And no matter how big or small your business, you’ll have to plan for these and other risks if you want your business to thrive. One way to do this is with insurance.

Read More »

Funding a Buy-Sell Agreement with Life Insurance

As a partner or co-owner (private shareholder) of a business, you’ve spent years building a valuable financial interest in your company. You may have considered setting up a buy-sell agreement to ensure your surviving family a smooth sale of your business interest and are looking into funding methods. One of the first methods you should consider is life insurance.

Read More »

Transferring Your Family Business

As a business owner, you’re going to have to decide when will be the right time to step out of the family business and how you’ll do it. There are many estate planning tools you can use to transfer your business. Selecting the right one will depend on whether you plan to retire from the business or keep it until you die.

Read More »

Don't Miss Anything

Stay up to date with our monthly newsletter.