After having read a rather scary news story where you learned that half of all adults were two paychecks away from the streets, you have decided that you don’t want to be this vulnerable anymore.
According to an article that Adam Rosenfeld Merrill Lynch posted on Tumblr recently, he feels that everyone should draw up a financial emergency plan.
We agree wholeheartedly with this point of view; keeping that in mind, here is what you should do to put yourself and your loved ones in a more financially secure position.
1) Save up six months worth of living expenses
This goal may sound intimidating to you, but don’t think that you have to arrive at that figure by next week. Starting with your next paycheck, set aside at least 10% of right from the get-go, and do whatever you have to do to make it on the other 90%.
As difficult as that might seem, there are people out there that are dead broke right now, and somehow they manage to make to their next payday, so dig deep and make it happen.
In order to make this a reality, know that you are doing this to remove financial stress from your life. Once your emergency fund is in place, you’ll be able to weather a job loss with ease. Furthermore, if you hate where you work, this reservoir of capital will provide the safety net you need to look for another position without worrying about how to pay the bills straight away.
2) Get insurance in place
Despite your best efforts, you might end up facing a crisis that six months of rent and grocery money won’t be able to solve.
Health emergencies, the sudden death of a major income-earner, or flooding caused by a once in 200-year storm can easily ring up bills reaching into the tens or even hundreds of thousands of dollars.
In situations like these, having an insurance policy in place is your best defense against crushing debt payments and potential bankruptcy proceedings.
In most cases, your agent will assess what has happened and then they will cut you a check to cover your expenses. With this disaster averted, you will be able to can carry on with your life as if nothing had even happened.
3) Set up a will
As unsettling as it is to think about, it is an inescapable reality of life that we all will die someday. When you pass from this Earth, it goes without saying that you will lose the ability to make financial decisions regarding your estate.
Without a will in place to dictate who is entitled to what, it will be left to the courts to settle this matter. Don’t put your children in the position of having to hire lawyers and go to war against each other; get a will kit, and begin the process of assigning the ownership of assets to various family members today.
This way, the succession of your possessions will progress in an orderly fashion after your sad departure from this world.