Financially prepare for the unexpected

To be financially free of all worries and anxieties, we all make plans and prepare. To succeed at being financially free however, one must plan for and prepare for unexpected events of life as if they are expected to happen – even if they eventually don’t.

For example, the level of planning and preparation that go into building a house, buying a car and planning for new baby, among others, should be replicated in unexpected situations like job losses, fire outbreaks, lengthy strikes and industrial actions, among others.

There was fear and tension before the just concluded general elections. A lot of people filled their houses with food items in preparation for any eventual violence that could lead to the declaration curfews by the government.

Experts believe that establishing an emerging fund can be very useful in this kind of situation.

According to Miriam Caldwell, personal finance specialists, there are moments in life that will change everything and shake things up for you. It may be getting a pink slip at work, or a positive pregnancy test when you were not trying or it could be hearing some great news or finding the perfect job and landing it.

Not all unexpected events are negative, but generally the big ones will affect your financial future, and you may need to change the way you think about and handle your money. Even the most careful planner may be taken by surprise with news that they had not planned or prepared for.

She said the best way to handle these events is to have prepared for the unexpected in advance. It does mean careful financial planning, and after the event happens you may need to asses your current plan and make changes, but it is nice to know you have an emergency fund and a contingency plan in place to fall back on until you have managed to wrap your head around the ways that your life will be changing.

The first step for preparing for the unexpected is to have a solid emergency fund in place. This should be about six months of your income. If you are single or if you have a family, but only one income provider, you may want to increase this to a year. This will provide security while you recover from many emergencies. 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, she said.

You also need to prepare for other unexpected situations. It is important that you have adequate life insurance for your family or your spouse if you are married. The life insurance should provide enough money to live on after you pass away. If you have children you should get enough that it can help cover the cost of their education. It is vital that you have life insurance coverage if you have children.

Another area you can prepare for she said is natural disasters. The last few years have shown just how devastating these disasters may be. They can come upon you suddenly, and you need to be prepared to deal with them. A good emergency kit with a five-day supply of food and water is good to have on hand in your home, car or office. The kits do not need to be very large or elaborate, but they can make a difficult situation much easier to get through.

HOPE MOSES-ASHIKE