I have never been much of a long-term planner. I always figured that financial planning was for “old folks” about to retire or for people who had so much money they didn’t know what else to do with it. But when my son Kell was diagnosed with Type 1 Diabetes at the age of two, all of that changed. Suddenly his life was DEPENDENT on insulin and his insulin pump supplies (both of which are incredibly expensive!) Right after Kell was diagnosed, we spent 5 days at Primary Children’s Medical Center and at the time, had no health insurance. My husband had just started his own video production company and I was a stay-at-home mom. Combine the hospital expenses with the extraordinarily high cost of diabetes supplies and we were in deep financial trouble. Needless to say, that experience set us back for years because we had no contingency financial back up. I realized after that life-changing event that I would never feel comfortable again unless I was prepared financially for any emergency and have since become a big believer in the power of planning! As far as my misconception that preparing financially for the future is just for “rich people”… studies show that a comprehensive financial plan can benefit people at all income levels — but most of us don’t realize this. According to the 2012 Household Financial Planning Survey conducted by the Certified Financial Planner Board of Standards, only 31% of American families say they have created a financial plan, and 64% don’t have enough cash on hand to handle a $1,000 emergency. If you are one of those families, here are five reasons you might want to consider “preparing for the unexpected“:
It will help you identify risks you hadn’t thought of.
What is your risk of becoming disabled and being unable to support yourself or your family, or dying early and saddling your family with an unmanageable mortgage payment?
It will show you what money mistakes you’re currently making.
Analyzing your overall financial picture sometimes exposes mistakes (like overspending) — and easy fixes.
It will make you more confident with your money.
According to a Certified Financial Planner Board survey, 52% of those with a plan feel “very confident” about managing their money, while just 30% of those without do. When we have a plan we feel more in control of our finances.
It will help you live more comfortably.
According to a Certified Financial Planner Board survey, people with a plan making between $50K and $90K are more likely to live more comfortably than even those making $100K+.
It will help you find new ways to maximize your money.
Having an outside expert look at your financial picture might reveal opportunities to make or save money that you hadn’t thought of — like taking advantage of a flexible spending plan at work. Bottom line…..YOU control your destiny and YOU make financial decisions based upon what is best for you and your family. No more excuses – you can do it and by taking charge of your finances you will have the resources to achieve your goals. While you don’t necessarily need to hire an outside person to create a financial plan for you, a lot of people do so to save themselves the time and energy of sifting through a lot of conflicting advice. If you need some professional advice, consider using the Prudential Financial Professional Locator. Have you ever learned an important lesson from an unexpected life event? Feel free to share your story on social media with #PlanRealistically or #WontHappenToMe.