As you think about your finances and savings, it’s important to keep in mind that there are some types of events that are unexpected and difficult to prepare for. While no one wants to experience disability, incarceration, or the death of a family member, these events do happen. When they do, it’s important to know how to handle them. A financial advisor can help provide you with information about how to deal with these expensive, unexpected events, as well as many others.
1. Death of a Family Member
While it’s unpleasant to think about, death is an inevitability. If you are financially dependent on someone in your household, it’s important to have a plan in place for your financial future. This could include income planning, savings, life insurance, or a combination of these. Planning for the future can help make sure that everyone feels more secure.
2. Accidents and Injuries
It’s almost impossible to predict if you or a member of your family will become injured or disabled in an accident. Even something like a broken arm or serious illness can leave your family without a source of income for quite some time, causing dramatic financial difficulties. Preparing in advance by carrying insurance against this type of event, as well as saving money in an emergency fund, can help. A financial advisor may have additional ideas that can assist you in your preparations.
3. Major Home Expenses
Replacing major appliances or dealing with severe damage to your home caused by severe weather can be quite expensive. For example, furnaces are designed to last for about 15 to 20 years, and if you purchase a home with a furnace that’s near the end of its natural life, it can be extremely expensive to replace. If you’ll be purchasing a house, it makes sense to have some money set aside to cover this type of expense, or to carry insurance to help protect you financially where possible. Otherwise, you can find yourself in a financial situation that’s difficult to manage.
4. Long Term Care
Elder care is another major expense that many families are unprepared for. Around 70% of people currently turning age 65 will need long-term care in their lifetime. This can be quite expensive, whether the family is paying for home health care, a senior living facility, or something else entirely. Long term care insurance and specific types of investments can help your family prepare for these expenses. A financial advisor can give you some ideas about how to plan for long term care based on your age, so that you’ll have the money that you need for the future.
5. A Criminal Record
Most individuals don’t prepare for criminal charges, but this unfortunate event can sometimes happen. Once an individual has a criminal record, it can be very difficult to recover financially. For example, in Ohio, an individual with a criminal record must deal with almost 900 barriers to income known as ‘collateral sanctions’. These restrictions in the state law affect their family, employment, housing, and other rights, with many affecting their ability to earn an income through employment. This means that if someone in your family is charged with a serious crime, you may have to entirely restructure the ways that you earn money to accommodate for the new situation, even after they are released from prison.
While no one prepares for an extreme situation that affects the family finances, these situations frequently occur anyways. These expensive life events are difficult to prepare for, so it’s important to work with a financial advisor so that your family has an overall emergency plan. This plan can be adapted for one of the above events, as well as other difficult situations, and helps protect your family in times of crisis.
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