Life is unpredictable – that is the least we can say about life. Though you cannot predict what will happen in the future, you can prepare for it. Most of us prepare only for the situations we want to happen. For example, we plan for retirement, a holiday home, or a foreign vacation. It is good to plan for these events, but what if life takes unexpected turns? How can you prepare for threatening financial situations?
Financial planning helps you and your family survive even the tough times. Sadly, not everyone does it. Today, we will discuss the four threatening financial situations. We believe that everyone must acknowledge them and prepare to face these situations. You may think these situations only happen to people around you, but the reality is these are common life situations and can happen to anyone.
Have you thought about what will happen to your loved ones in the unfortunate event of your death? If you are the only breadwinner in the family and not prepared for this situation, your family will have tough times – mentally and financially. Financial goals like a child’s education cannot be compromised, and you must ensure they are no hindrance to such financial goals. Your responsibility as a breadwinner is not only to earn money but to secure your family’s future. You must have adequate life insurance and planning to ensure in the unfortunate event of your death, your family can maintain the same living standard. You need to ask yourself this difficult question – Is my family financially secure in case I am no more? If not, you need to act now. Our life is more precious than our cars that we religiously cover.
In today’s economic situation, there is always a possibility that one may lose his job. If a recession comes, many may lose one’s job. Yes, you can get another job. However, during the phase when your monthly income is zero, can you handle the situation? In such a situation, can you take care of your monthly EMIs, children’s education fees, health needs, etc? What if one is not able to get a job for an extended period? These are some things you cannot avoid or park for the next month. You have to take care of them monthly.
You must plan for such a situation. You should either have enough savings or an alternate income source to save you on rainy days. Do you have another skill that can give your job immediately? You should ask yourself – Can I financially survive a few months without pay? If the answer is NO, you should plan for it. We are sure you do not want to be in such a situation, nor want your family to be in it.
You or someone close to you may require a few lacs immediately. It could be a situation of a calamity, a medical emergency, or some other requirement. Can you handle such a situation? Every individual should maintain a reserve of three to six months of their monthly expenses in emergency funds. You can keep your emergency fund in liquid funds or fixed deposits. The important thing is that you should withdraw these funds only when there is an emergency – you need the cash immediately.
Like death, hospitalization drains you mentally and financially. The medical treatment cost in India is very high, and it is increasing with every passing year. If you met with an accident or are diagnosed with a critical illness like a heart ailment or cancer, the treatment cost is high. If you are unprepared for such situations, all your life savings may drain quickly. Have health insurance plans with riders to have all-around protection. The health insurance plan should cover you and your family members.
You must plan for every financial situation. You need to create a financial plan that ensures that life goals get fulfilled in all life situations. You not only have to plan but also plan carefully. For example, having the right cover for the term plan is essential. You should evaluate your financial situation completely, and accordingly, select the coverage amount. The same holds for a health insurance plan.
Financial planning requires a certain level of expertise, and we at Right Horizons have been doing it for years for our clients across the globe. We look at your situation holistically and offer the best possible solutions for your financial needs. Reach out to us if you want to have complete financial protection.
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