Most people will agree that having a financial plan is a good thing. It can put you on the right track to become and stay financially secure. A financial plan can also help you be prepared in the event of an unexpected life situation that can put a strain on your finances. Here are a few potential life situations that you’ll want to be financially prepared for.
Losing Your Job
Many people this year have discovered firsthand just how financially devastating it can be to lose a job. Regardless of whether you quit or were fired or furloughed, you end up without a steady source of income. Sure, you may be able to qualify to collect unemployment under some circumstances, but typical unemployment payouts are likely a fraction of what you had been bringing in previously. Having a financial plan that includes an emergency fund with savings to cover a few months of expenses can really come in handy here while you work on finding a new job.
A Work Injury
You don’t have to lose your job to lose work-related income. If you become injured at work, you may find yourself unable to work. This can have a serious negative impact on your finances. Depending on the injury, you may be out of work for as little as a few days. In the case of more severe injuries, it’s possible that you may not be able to work for months or even ever again. Or you may have to change industries altogether to find work you can do. Other options for replacing your lost income include taking advantage of short- or long-term disability coverage if offered by your employer or applying for Social Security Disability benefits. Social Security Disability benefits are generally based on your lifetime earnings. It can take time for you to be approved for SSDI though, so don’t count on getting that money right away.
Growing Your Family
Adding on to your family is something a lot of people do with a plan, but that isn’t always the case. Having a baby can be expensive, even if you do take action to save money on delivering a baby. Growing your family is a wonderful thing to do, but it does have a way of straining family finances. It doesn’t go away either. Having a financial plan can really help you budget carefully so that you can pay your medical bills in a timely manner and stay financially stable with the additional expenses.
Life has a tendency to throw people into unexpected situations. Few people would anticipate losing their job or getting injured at work. While growing your family is often a planned thing, that’s not always the case either. If you find yourself in any of these situations, you’ll be glad you have a financial plan in place.
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