Most people check the weather forecast every day before leaving home in case they have to protect themselves from possible weather conditions. So, if rain is forecast they can bring an umbrella or raincoat with them. Sadly, most people are not prepared for the financial storms that will attack.
If it makes sense to protect a few hundred dollars’ worth of clothes and your body from the elements, doesn’t it also make sense to be prepared for an attack on your lifestyle?
This is probably the cornerstone of financial preparedness. It is recommended that you have at least three to six months income set aside for this. If a need arises to use some of the funds, they should be replenished as soon as possible. Some of the reasons for access may include:
•Temporary period of unemployment.
•Cash needs during the waiting period for disability insurance benefits.
•Legal fees required to deal with an unexpected problem or conflict.
•The deductible for vehicle or home insurance at claim time.
•Medical costs not covered by Provincial Health Care or health insurance.
•Accommodation costs if the need arises to evacuate your home. Remember the flooding in Southern Alberta in June 2013?
•Vehicle rental costs if your vehicle is awaiting repair or replacement.
Some of these may be reimbursed at a later date and these proceeds should be put back in the fund.
Accident & Sickness Insurance – Can you take a six-month vacation right now? If you became sick or hurt and couldn’t work for that length of time, what would happen to your lifestyle if your income suddenly stopped? What if it was even longer? Many mistakenly believe that their group benefits will take care of them. Review your benefits with your financial advisor to make sure they are adequate, actually in effect and that the definitions don’t increase the possibility of non-payment when a disability does occur.
How would your lifestyle be affected if you experienced a serious illness, like cancer, heart attack or stroke, and made changes to your work schedule to help the healing process? What if you couldn’t return to your usual work position?
Life Insurance – Life insurance provides cash at the exact time it will be needed most after someone dies. The proceeds can be used to pay-off debts, pay for expenses that arise on death, and replace an income for those that rely on it.
Property & Casualty Insurance – Vehicle and home insurance is generally required by law or by a lender that financed the large purchase. Review this coverage regularly to make sure it is adequate and that the deductible fits with your ability to pay it.
Retirement Savings – You probably don’t want to work for the rest of your life. If you don’t send some dollars ahead for your retirement income, you may be forced to make a serious lifestyle change to get by on the relatively meager government benefits. – M Dumond
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