4 threatening financial situations: How well prepared are you to face these?

4 threatening financial situations: Are you prepared?
We begin our each day with hope for bright future for self and family. We leave our homes for our jobs and other errands not knowing what situations can come up. Certain personal and social situations may or may not affect our families. But few bad financial situations affect us and our families severely. Well planned finances can help us survive tough times. However not everyone is well prepared. It's always a good idea to do rain check. Let's see how well prepared are you for following Situations?

1: Supposing you die...?

Let's begin with the most dreaded and certain event- death. Are your finances tied up to take care of future needs of family? Are you adequately insured? Does your family know details of your all financial, legal and job related documentation? Have you made a will? There are lot many points to ponder upon.

As the bread earner your responsibility doesn't end with earning money but begins with it. You must not only take care of your family during your life time but even after your death. A good documentation of well planned finances and keeping your family members in knowledge of all your dealings will ensure that your family lives happily long after you are gone.

2: Supposing you lose your job...?

In current economic scenario the threat of losing the job looms large on many of us. A loss of job not only renders the individual jobless, worthless (A feeling till you get another job), but throws life completely out of gear.

How does your family survive the shock? Have you catered financially to take of children's education, health needs and daily day to day living needs? Are you prepared financially to survive few months without pay? What are your options to generate revenues when your steady source of income is lost? Have you saved for a rainy day? Are your savings adequate to cushion the loss of job? Do you have any alternate source of income? Have you developed any additional skills that can help you in getting a new job or money? It is time to ask a lot of similar questions and find answers to the same.

3: Suppose you need a few lacs all of a sudden...?

You would have heard financial advice to maintain a reserve of three months of family expenses in savings account, fixed deposit, liquid funds or in a manner that you can get that amount if required. All of us do mange a certain amount in our accounts.

But how about managing to get a few lacs in the shortest possible time to grab a good financial opportunity or to manage a financial emergency? Many can manage Rs 1 Lac. But getting Rs 5 or 6 Lac suddenly needs a planning and careful thought process. One needs to have liquid funds as well as a good network of friends and relatives who can come up with the cash at least possible delay. It is never too late to plan for such an eventuality.

4: Suppose you were to be hospitalized?

Like death, hospitalization seems to be a certainty in today's tough times. As reports suggest Blood Pressure, Diabetes, Heart ailments and cancers of various types are hitting people with lower age every passing year. Such hospitalization is not only life threatening, but costly in terms of finances.
Have you planned for such an eventuality? Do you have adequate medical cover? Are your family members aware of the same? Have you planned your finances to cater for such an eventuality? Do they know which hospital, which doctor which insurer to refer to? Is your contact list updated? Are your financial dealings known to your family? One must ponder and plan over these issues.

The above mentioned situations are real. They can affect each one of us at some or the other time. A well prepared financial plan can help not only you but your beloved ones to survive emotionally and financially as well.A well thought out financial plan will assess your financial value to your family and advice you to take required life cover.The financial plan will help you in creating a will.

The financial plan will help your near and dear to understand the financial status and manage it form where you have left.The financial plan will guide you with the right amount of health cover you and your family need, so that you need not pay out of your pocket for your hospitalization.The financial plan will assist you in creating the required amount of emergency reserve so that you will be having easy liquidity when there is an emergency.

It's time to take careful look at your finances and find gaps if any. So without wasting a moment, plan for the above situations with financial experts. A financial expert can look at situations holistically and come up with best possible solutions.

Ramalingam K, CFP CM is the Chief Financial Planner at holisticinvestment.in, a leading Financial Planning and Wealth Management company.

Read more about: financial planning
Story first published: Thursday, July 25, 2013, 10:06 [IST]
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