If you found yourself facing a major life crisis, would you be prepared to handle the financial fallout?
According to a State Farm "Financial Plan B' survey, only 45% of Americans have a backup plan to help their families weather a traumatic event such as a job loss, a devastating illness, or the death of a spouse or partner.
The survey also revealed that many respondents had unrealistic or potentially unsound options for dealing with a financial emergency:
- 61% would tap into their retirement funds
- 68% of people 55 or older would take a second job
- 22% would move in with family members
Having a plan in place helps you make rational decisions when faced with a crisis. Use these suggestions to create your own financial Plan B:
- Discuss the topic: While it may be difficult to talk about "what-if" situations, you and your spouse or partner owe it to yourselves to address your hopes, fears, and the realities of your family's situation. Consider various scenarios in your discussion such as what you might do if you lost the income of the primary breadwinner or if you needed to fund additional hours of child care.
- Review your situation: Examine all available sources of income, your current insurance coverage, and your retirement savings. Calculate your debt and review your emergency fund. Make sure your wills and estate plans are up-to-date. You should also create a list of colleagues and employers who could provide job leads if you were to be downsized.
- Know who to call: Depending on your circumstances, you may need the knowledge of professionals such as your State Farm® agent, an accountant, a lawyer, or a financial planner. Build relationships with these professionals now so they know you and are ready to assist you in a crisis
- Put your plan in writing: Record your Plan B and tell family members where to locate the document. Having a written plan can help you or family members take action without delay.
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