From the events of 2020 and 2021, many of us have learned the hard lesson that we can never, ever predict the future. Disaster of any nature can strike at any time and we may never be able to truly prepare for every future possibility. But this doesn’t mean we shouldn’t take steps to protect ourselves both emotionally and financially from the eventuality of a future crisis.
A solid financial cushion is important to make sure your basic needs are taken care of in the midst of an emergency. No matter the circumstances, being protected financially can relieve an enormous burden of stress and allow you the space to focus on your emotional well-being during a crisis. Below, we describe the best steps you can take to manage your finances both before a crisis and in the midst of it.
1. Focus On Your Emergency Fund
It takes time to build up an emergency fund, so this should be your first priority to protect yourself during a crisis—whether that crisis is a global pandemic, a personal health emergency, the loss of a spouse, or the loss of a job. A solid emergency fund should ideally amount to at least 3 to 6 months of expenses. This amount of money will generally allow you the time you need to create a plan for the future and begin recovering to a more stable position.
Before a crisis hits, save as much as you can to build up your emergency fund as quickly as possible. If you’re already in the midst of a crisis, find ways to cut your expenses as much as possible so you can continue building the emergency fund or make it last longer. Some of these money-saving techniques can be simple, such as canceling subscriptions you don’t often use, switching to generic brands over name brands, and cooking more meals at home.
2. Make A Plan
The next step is to make a plan for recovery. The act of writing down your plans will help calm your fears and provide tangible steps to take as you work through the crisis. Develop a solid understanding of your monthly cash flow so you know exactly how much you need to pay the most urgent bills and what you’re able to cut from your budget.
If you’ve lost your job, write down the steps you need to take to find another one or start a business to generate more income. If you’ve lost a spouse, write down the tasks you need to complete, such as gathering records and documents, organizing online login information for all your financial and insurance accounts, and contacting the right people to review wills and estate plans or life insurance benefits.
Don’t forget to make plans to take care of yourself emotionally during a crisis as well, such as spending time with friends and family or scheduling appointments with a mental health counselor. Disallowing yourself the space to grieve and process your emotions will only make it more difficult to complete the necessary financial tasks and eventually find healing.
3. Partner With Trusted Experts
No one should have to face a crisis alone. In addition to supportive friends and family or professional mental health counselors, you may also need financial professionals in your life such as a CPA, an estate attorney, and a financial advisor to help you make the right decisions and keep you on track with the important tasks you need to complete.
As with your emergency fund, it’s better to begin building these relationships before a crisis interrupts your life. Although developing trusting relationships during a crisis is by no means impossible, you’ll rest easier knowing you already have a reliable team behind you who knows your values, your plans, and your current circumstances.
If you don’t yet have a financial advisor on your team, we invite you to get to know us at Center for Wealth Management. We’re here to celebrate your successes, but also to help you navigate life’s greatest challenges. If you’re ready to see if we’re a good fit, please give me a call at (248) 220-4321 or email email@example.com.
Justin Williamson is a Senior Partner and Co-Owner of Center for Wealth Management, an independent, fee-based wealth management company in Troy, MI. Justin has been serving clients in the financial services industry since 2001. He spends his days helping his clients achieve their financial goals and make the best decisions for their families so they can spend time on what they love and experience financial peace of mind. Justin is known for his dedication, integrity, personal touch, and ability to simplify complex issues. Justin specializes in serving engineers and other professionals who are close to retirement or recently retired, helping them maximize their benefits and create a retirement plan they can rely on. He is a seasoned public speaker, presenting at numerous corporate events each year on retirement planning, Medicare, Social Security, and other financial topics. Justin has a bachelor’s degree in Business Administration majoring in Personal Financial Planning from Central Michigan University and is a CERTIFIED FINANCIAL PLANNER® (CFP®) professional.
Outside of work, Justin enjoys spending time with his family. He lost his wife of eighteen years, Heather, to brain cancer in 2020. He and his son, Carter, and twin daughters, Jaden and Kelsey work to honor her and make her proud each day. You can often find him coaching baseball, softball, and basketball, and spending time with his family at their cabin at Higgins Lake. Learn more about Justin by connecting with him on LinkedIn.