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 (at least that is the initial diagnosis), and 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 and it begs the question 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?
What do I mean by a catastrophic financial failure?
- 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, which I did, but folks who got hit a month after I did, ended up with nothing, and 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?
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.