Get prepared: financial emergenciesSubmitted by Agrawal Associates on May 5th, 2017
May 7, 2017
Are you prepared for an emergency? May 7-13, 2017 is Emergency Preparedness Week. There are many physical things you can do this week to prepare for emergencies: stocking up on ready-to-eat food and battery-powered radios is a great first step.
But what about financial emergencies? The advisors at Agrawal Associates encourage you to consider your financial preparedness this week as well.
Prepare for physical emergencies
There are many emergencies which can impact your financial health. Review a few key areas to see if your family is prepared to weather a financial storm.
- Risk management — Ensure you have appropriate insurance coverage for your home and belongings in case of a physical emergency. Be sure that your advisor follows the prudent principle of connecting you with your payout so you know exactly who to contact and when you can anticipate a payout.
- Cashflow planning — The Government of Canada recommends every person have resources for at least 72 hours after an emergency. This guideline includes financial resources. Your cashflow plan should include physical emergencies. How will you access funds if power is out or if you have to evacuate to a different area? Planning for this is the place to begin.
- Emergency preparedness expenses — Depending on your risk tolerance, you may wish to invest in products or services for emergencies. Installing sprinklers, purchasing and maintaining an emergency generator, or enrolling in a medical alert program are just some of the expenses you may wish to build into your preparedness plan. Factor these elements into your annual budget in anticipation of the costs associated.
Prepare for income emergencies
To address unanticipated job loss, you should consider how long it may be before you return to steady employment, along with the Employment Insurance waiting period.
These timeframes can fluctuate depending on where you live, the economy, and your profession. While the general rule of thumb is to have three months of savings in an investment, you can liquidate if needed. Will that be sufficient? Are you prepared if the situation extends to six, 12, or even 18 months? Your financial advisor can assist you with planning for best and worst case scenarios.
Ensure that your investment portfolio includes asset allocation that will allow you to have access to the funds that you need if your income changes unexpectedly.
If you are a business owner, business planning including key person protection, succession planning, and risk management should also be a part of your emergency preparedness plan.
Prepare for changes to your health and wellness
Insurance products can help protect your financial future and your estate in the event of sudden illness, death, serious injury, or disability. With an insurance need analysis, your advisor can ensure you get the coverage you’ll need so an accident doesn’t result in additional strain on your family. Estate planning can also ensure that your beneficiaries are well-protected and that the transfer of assets is smooth and quick.
All things considered, it’s important to be prepared for unforeseen circumstances. With help from Canada’s Emergency Preparedness website, do an emergency audit on your physical and financial preparations. And if you haven’t already, work with your advisor to build emergency preparedness into your financial plan.
- Agrawal Associates