No one wants to think about the worst case scenario when it comes to the future, but are you prepared for the unexpected? With the end of the year approaching, I thought now was as good a time as any to do a bit of a stocktake.
We are extremely fortunate that to date we haven’t suffered any dramatic unexpected life events. No job losses, no major injuries or accidents and no significant financial hardships. In the back of my head I do sometimes wonder when it will be our “turn”, even though I know it doesn’t work that way.
While I am extremely thankful, it does make me even more aware of the need to prepare for the unexpected, and also have some idea of what to do if the worst does happen. These are some areas where it’s worth a check up heading into the new year to make sure we are all prepared for the unexpected.
Paying insurance premiums can be a tough slog when the budget is tight, particularly if you’ve not ever had to use your insurances. It can seem like a waste of money month in and month out but the reality is that proper insurance is one of your greatest protections against the unexpected.
Aside from the obvious car, home and contents insurances, make sure you’ve covered insurance for you and your earning potential. Generally these insurances include life and total permanent disability insurance as well as income insurance.
It is sometimes possible to get these insurances through your superannuation to reduce out of pocket expenses but make sure to check all the terms and conditions thoroughly. You can compare income protection insurance options here.
Build up an emergency fund
How long could you survive if you were without an income? What if you were made redundant or had an injury and couldn’t work? A week? A month? A year? Would you lose your car, your house? Could you afford to keep your kids in their schools or maintain their sporting or artistic commitments?
Having an emergency fund is essential for preparing for the unexpected. If you are wondering how much you should have saved, you can find some of my thought on how much to have saved for emergencies here.
Everyone needs a support network
While preparing financially and practically for the unexpected is important, emotional and social support is also essential. It takes a village to raise a family (so they say!) and in times of unexpected injury, illness, financial distress and grief that village really comes into its own.
Do you have a support network? Who could you call on for practical or emotional help if your world fell apart tomorrow? If no names come to mind then maybe it’s a good time to start investing in some genuine relationships and building that village!
Know where to turn
All the planning in the world can’t prepare you for every unexpected event, and depending on what happens, you may need to reach out for some outside assistance. Knowing ahead of time where you can turn when it all falls to pieces takes the burden off and gives you a bit of a plan.
Many unexpected events that turn people’s lives upside down involve a serious accident or unexpected illness. In some of these cases insurance companies get involved and the process isn’t always easy or straight forward. If you are in a situation where you’re dealing with an insurance company or potentially looking at compensation claims it is a good idea to get legal advice. Firths is a law firm that specialises in compensation claims and can help people navigate this complicated area. You can read more about some of the cases they’ve been involved in here.
If it’s practical assistance such as food, shelter or financial planning and assistance that you need, some of these organisations may be able to help.
- Centrelink: Help following job losses, injury or if you are leaving a domestic violence situation.
- MoneySmart: Heaps of useful money info and specific information and services to help after a job loss.
- The Salvation Army: Help in times of need including job losses, domestic violence, homelessness etc
- The Red Cross: Help managing homelessness, disasters, debt, domestic violence etc
Heading into 2016, now is the time to do your own stocktake. Are you prepared for the unexpected?