Published on: Wednesday, November 6, 2024
In a television commercial for an electric power generator you can purchase for your home, an actor tells us “the number one thing to prepare for is a power outage”.
Really? Number one?
Perhaps that’s true if you live in an area where power is precarious and you rely on it for more than just lights and appliances. It might run your well or heat your home as well.
But for most of us, I’m not sure we would say it’s the number one thing to be prepared for.
As a financial planner, an important part of my conversations with clients is trying to anticipate things that may occur and impact their finances. Identifying those things and having a plan for how we would handle them is part of risk management.
It is carried out within an investment portfolio to manage risks that I have detailed in a past blog. But there are risks and uncertainties that exist outside a portfolio as well.
What are your “what ifs” ?
What if….
- I lose my job?
- I get sick and can’t work?
- I die?
- The economic environment affects my business?
- One of my children needs financial help?
- My parents age and need help?
- My car, furnace, roof etc. breaks down?
Besides all of these, and others, each of us needs to gauge the likelihood and degree of impact they would have. Some would cause us to say “not concerned; not a big deal”. Others would make us say “ouch” and for those we need a plan and a strategy.
You can make a list as long as you like and you still would not identify every possible risk. I can humbly say that prior to early 2020, I had never identified “what if…. there is a pandemic?….”
Comprehensive planning is carried out to help us reach our goals and also to give us peace of mind. Knowing we can deal with foreseeable “what ifs?” allows us to focus our attention and energy on other things, hopefully those that give us the most personal fulfilment. It’s the financial planning equivalent of the power going out and knowing that the generator will kick in.