Emergency Financial Planning for Minnesota Families
Having a plan in place makes everything feel so much more manageable, doesn’t it? Life is chaotic and unpredictable, so making a plan helps us feel more in control of our surroundings.
But when it comes to planning, many people forget to account for deviations. In other words, an emergency can throw everything out of whack! So, the best way to mitigate its effects is to plan for such emergencies.
Let’s go over the foundational principles of emergency financial planning, so you can feel more confident about handling what life throws at you.
Three Pillars of Emergency Financial Planning
When it comes to emergency financial planning, there are really three pillars that we build upon to ensure long-term stability:
Saving
Protecting
Managing
By focusing on these three steps, we can help your family plan for life’s unexpected emergencies.
1) Save an Emergency Fund
The first step in preparing for emergencies is creating an emergency fund. To build a comprehensive safety net, you must first be financially prepared for some “wiggle room.” In other words, if any financial emergency should arise, you will need back-up funds to cover immediate needs until longer-term solutions can be sought.
Even if you live paycheck to paycheck, it’s important to find some money each month to set aside for possible emergencies. If you can save at least two to three months of your family’s budgetary needs, you will have more confidence in handling life’s unknowns. If that feels unattainable, here are some creative ways to boost your emergency fund’s size.
2) Protect Your Finances
Once you have a safety net in place, you need to consider how to protect your assets and finances. Essential insurance coverage can help to protect against major financial disasters, such as disability, health emergencies, or even property damage.
Imagine experiencing a house fire without homeowner’s insurance! How could anyone ever recover their losses? Likewise, families that are unexpectedly hit with massive medical bills often struggle to find a way back on track.
However, sensible insurance policies can help to protect the largest assets you likely have, such as a car, home, boat, or motorcycle. You also want to be sure your own life (and the lives of your family members) are protected with life insurance. If you were no longer here to financially provide for them, would your family be able to get back on their feet?
Additionally, despite having quality insurance policies, there are often additional costs that some do not expect. Supplemental insurance, or umbrella policies, can help to fill those gaps. Having a combination of both an emergency fund of “liquid” cash (easily accessible and able to be withdrawn without penalty), in combination with insurance coverage, creates strong financial protection against life’s emergencies.
3) Manage Day-to-Day Expenses
Lastly, your third pillar of focus should be sticking to the plans you’ve put into place. Do you have a household budget? If not, today’s the day to start one - click here for the first steps!
Much like a sensible diet or routine exercise, having a healthy household budget means keeping it in shape and your expenses in check. Read these tips for additional advice about budgeting.
Your First Steps to Greater Financial Stability
Once you have a monthly household budget, have set aside an emergency fund, and properly place insurance policies into action, you will have smart protection against life’s emergencies. But it won’t work without your drive, focus, and determination.
Making plans for handling emergency situations can only work if you are committed to them. Work closely with your partner, if applicable, because you must be on the same page in order to make your financial future what you both want it to be.
This is where many people seek the help of a professional. Finances aren’t easy, and it can be difficult to see where savings may come from, how a budget would work, or in what ways you can plan ahead. But with the right professionals in your corner, you can find a pathway to financial stability - even through life’s unexpected emergencies!
Feel free to schedule a meeting anytime on our website. I’ll be happy to discuss investment options, review budget plans, and help you make decisions that you can feel good about.
Reegan Rehm, and Rehm Insurance and Financial Services are independent of, and not affiliated with, The Lincoln Investment Companies. Insurance products are not offered through The Lincoln Investment Companies.