Life is fun. Life is crazy. It can be heartbreaking. And in most cases, life can be quite unexpected. Things happen outside of our control all the time. No matter what we do, things happen to us, and if we’re unprepared, we will struggle. A major part of that is financially planning for all the “ifs” in life.
What if you get into an accident and miss out on several months’ worth of work? Do you have a plan if the economy takes a nosedive tomorrow and you lose your job? Can you imagine saving money for decades only to have a major event drain every dollar you have? And what about the unexpected death of a loved one…or even yourself?
These are things we don’t like to think about. Still, we must plan for them. We have to be prepared for all these situations. There’s nothing we do to avoid them and refusing to talk about it will only hurt you in the long run. Just like you try to make it to the doctor every so often for a health check-up.
Mark Rheaume, the senior wealth strategist at PNC Wealth Management, says it’s just as important to know where you’re at financially.
“As many people age, they spend a significant amount of time before doctors — focusing on their wellness and what they are ingesting,” he says. “But we often find in the financial world, there’s not a significant amount of planning done. This not only relates to their financial matters but also their estate plan and the legacy they are going to leave.”
Being Financially Prepared
It’s not enough to just have money in the bank for a rainy day. Let’s say you get incapacitated and are unable to make decisions in the moment. In that instance, having a power of attorney is essential. That will ensure your wishes are carried out. If you have considerable assets, no doubt your family will be fighting to make decisions.
This scenario has played out time and time again in courts across the country. “They are both lifetime instruments that are really critical for people to understand so they have control of their decisions, of their life and they don’t place themselves into the hands of an institution that may not know their intentions,” he says.
Still, you’re not set without a last will and testament. Many people who do plan for their eventual death don’t fully understand how it works. There are certain tax laws that can come into play as well. Having a will and trust is a great way to legally distribute your assets to your beneficiaries.
“There are often surprises contained in wills and trusts,” he says. “We have people trying to do wills themselves online and it can bring about unintended consequences. Oftentimes people don’t understand the practical impact of decisions within their will and trust.”
The Family Dynamic
Another important factor of being financially secure for the unexpected is evaluating your family financially. Where are you at right now? Do you have money in the bank? Are your kids taken care of? Are you saving for their college education? How much money do you have saved for retirement? If you live longer than you planned, are you good financially?
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“How does it all work together?” Rheaume asks. “What is the intersection and how those decisions impact those that we leave behind? What is our legacy? How thoughtful have we been with respect to what we have accumulated and what we have left behind? People spend so much time building their estates and really managing their expenses, but ultimately not dealing with the end game.”
