My kids being rather sporty has allowed me to be exposed to some very elite athletes who are very talented and their talent makes you sure they will go far in this sport, however, what happens if something goes very wrong? What is your financial plan b ?
This past weekend a very talented player on one of my daughter’s rugby team damaged her ACL. After dealing with one of my other daughter having her ACL broken, I know that this is a devastating injury, with a long recovery time (and some long-lasting issues as well). This player was going to play for a University team and was an elite level player, but now what?
This same kind of tragic accident/incident can happen in anyone’s life. What is your financial plan B? Plan B, typically is the name given to the steps you must take if your initial plan fails, or is in someway derailed, and everyone should at least have a generic Plan B for their finances to deal with a catastrophic failure of some kind?
Catastrophic Financial Failures
- Sudden death of the main family bread-winner is the easiest financial catastrophe that everyone should have a plan in place (i.e. Life Insurance and/or a Will). Yes that is a simple example, but you’d be surprised how few folks don’t even think about that one.
- Loss of job of major bread-winner (or possibly even both): This one I have lived through, and I thought I had a plan, but believe me, it was not in enough detail, and the more you plan, or think about this, the less gut wrenching it can be if it happens to you (or your spouse). I assumed I was going to get a “settlement” for getting laid off. Luckily I did, but folks who got hit a month after I did, ended up with nothing. Those folks really were in deep trouble, can you deal with that kind of a disaster?
- Economic disaster (read 2008), where stock values and fortunes can decrease (if not disappear) over night, can you deal with a sudden portfolio drop? Are you close enough to when you might need those funds that you should maybe take your profits now?
- Health failure, not death, but the major breadwinner is unable to work, how will that work? Do you need disability insurance, or do you create a “nest egg” or “disaster fund”? Can you deal with this?
- A pandemic that shuts down the global economy? Nah, that would never happen.
What does your Financial Plan B look like? Have you had to use your Plan B?
Other Plan B Stories
- Long Term Disability Insurance more opinions on the Nortel disability insurance debacle.
- Long Term Disability Insurance is a good thing to get, especially if you are the sole income earner in your family.
- Disability Insurance vs. Critical Illness Insurance, oh yes there is a difference so don’t get confused.
- Nortel : What is Left? Wasn’t much, and the Lawyers took most of the scraps from that.
- Plan for Emergencies always. Have an emergency fund, but having disability insurance is important too.
- Insurance: Paying for Something You Never Want to Use sums it all up, doesn’t it?
- Self Insured Company Disability Plans
I am still in the process of creating my plan B. I have the plan but not the means to produce it. My spouse is the primary wage earner but I have a part-time job I can change to full time job in three month, if something happens to him, it comes with health insurance. He does have disability insurance on him, and once I get pregnant and can no longer do my current job, he also we get life insurance. In addition we bought a duplex, and rent out half bringing in 17.5% of the income we need. We also are putting as much money in our investments which will bring in at least another 1%. We are still looking for more income streams and hope to buy another duplex in a little over a year. We also have a small emergency fund to cover any problems while we are building up plan B.
This is so true. I think we need a Plan C & Plan D also. At least we should know several options for dealing with change. Trying to have several streams of income helps to cushion any shocks. That can be done at any time, but the sooner the better. Don’t wait for Plan D to start trying to get these streams of additional income going.
It’s a hard one. Particularly if your trying to swing for the fences financially. It would suck if you where in the US, what with the lack of the welfare. What’s the situation like in canada?
We all need a Financial Plan B. Oftentimes, many of us don’t think about things such as life insurance.
Planning all financial aspects, including life insurance is a must. We just never know what tomorrow will bring and being prepared can make the unforeseen a little easier to bear.
Life insurance is an important part of any protection. As you get old(er), you should add long term care insurance. Building up assets that will support you during retirement or if anything changes in your income is very important. Multiple income streams is also part of plan B, to avoid dependence on any particular source of income.