September is National Preparedness Month, a reminder of the importance of being ready for the unexpected.
Emergency preparedness often brings to mind severe weather, emergency supplies, and plans for keeping your family safe. But preparation can also extend to your financial life.
An unexpected medical expense, job change, home repair, family emergency, or other major life event can quickly affect even a well-established financial plan. Taking time to prepare before something happens can help reduce uncertainty and make difficult situations easier to navigate.
At Resolute Family Wealth Advisors, we believe financial preparedness is about creating a plan that can adapt when life doesn't go exactly as expected. Here are several areas worth reviewing.
1. Review Your Emergency Savings
Emergency savings can provide an important financial cushion when an unexpected expense arises or income is temporarily disrupted.
Consider whether the amount you've set aside still reflects your current household expenses and responsibilities. As your lifestyle, income, family, or monthly obligations change, the amount you feel comfortable keeping readily available may change as well.
The goal isn't necessarily to prepare for every possible scenario. It's to create enough flexibility that an unexpected expense doesn't immediately disrupt your longer-term financial strategy.
2. Make Sure Your Insurance Coverage Still Fits Your Life
Insurance can play an important role in protecting against financial risks that may be difficult to absorb on your own.
Depending on your circumstances, that may include reviewing your life, disability, homeowners, auto, health, or long-term care coverage.
Consider whether your existing policies still reflect your income, assets, family responsibilities, and financial goals. Major life changes, such as marriage, retirement, purchasing a home, or welcoming a child, can be particularly important times to revisit coverage.
3. Review Beneficiary Designations
Beneficiary designations can determine who receives assets held in certain retirement accounts, life insurance policies, and other financial accounts.
Because these designations can sometimes take precedence over instructions in a will, keeping them current is an important part of financial preparedness.
Marriage, divorce, births, deaths, and other family changes are all good reasons to review your beneficiaries and make sure they continue to reflect your wishes.
4. Keep Estate Planning Documents Current
A financial preparedness plan should address more than what happens to your assets after your death. It should also consider who can make important decisions if you're unable to make them yourself.
That may include reviewing documents such as:
Your will
Trust documents, if applicable
Financial power of attorney
Healthcare power of attorney
Advance healthcare directives
Estate planning documents should be prepared and reviewed with a qualified attorney. Once they're in place, make sure the appropriate people know where they can be found if they're ever needed.
5. Organize Important Financial Information
If an emergency happened tomorrow, would your spouse or another trusted family member know where to find the information they need?
Consider creating an organized record of important financial information, including financial accounts, insurance policies, estate documents, professional contacts, recurring financial obligations, and other essential records.
Be thoughtful about how sensitive information is stored and shared. The goal is to make important information accessible to the appropriate people without compromising security.
6. Talk With Your Family Before an Emergency
Preparation works best when the people involved understand the plan.
You don't necessarily need to disclose every account balance or financial detail. However, a spouse, adult child, executor, or other appropriate person may benefit from understanding your wishes, knowing where important documents are located, and knowing which professionals to contact.
Having these conversations before they're necessary can help reduce confusion during an already stressful time.
7. Consider How Your Financial Plan Would Respond to Change
A strong financial plan shouldn't depend on everything going perfectly.
Consider what might happen if you faced a period of reduced income, an unexpected major expense, an earlier-than-planned retirement, or a new family responsibility.
Would your current strategy provide enough flexibility? Which expenses could change? Which financial resources would you turn to first?
Thinking through potential scenarios doesn't mean expecting the worst. It means understanding your options before you need them.
Financial Preparedness Is an Ongoing Process
Preparing financially for the unexpected isn't something you complete once and forget.
Your income changes. Your family evolves. Your assets grow. Your insurance needs may shift. Your estate plan may need updating. The financial safeguards that made sense five years ago may not fully reflect your life today.
National Preparedness Month can serve as a useful reminder to revisit these areas and identify anything that may need attention.
Looking Ahead
You can't predict every unexpected turn life may take, but you can take steps to be better prepared for them.
From maintaining emergency savings and reviewing insurance to organizing important documents and communicating with family, financial preparedness can help create greater clarity when circumstances change.
At Resolute Family Wealth Advisors, we're here to help individuals and families build financial plans designed not only for the goals they hope to achieve, but also for the unexpected events they may encounter along the way.
If it's been a while since you've reviewed your financial preparedness, September may be a good opportunity to start the conversation.
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September is National Preparedness Month. Explore seven areas of your financial life worth reviewing to help prepare for unexpected expenses, emergencies, and life changes.
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