A Guide for Building Financial Safeguards

Follow these steps to create a personalized plan with your own “financial safeguards” and take control.


Some things in life you can’t control, but there are many things that you can. Being prepared is about controlling the controllable. Want to get started? It’s simple. Follow these steps to create a personalized plan with your own “financial safeguards” and take control.

First, identify who is depending on you. There are two kinds of care you can provide for your loved ones: family care and financial care.

  1. Family Care is the type of care you provide for your loved ones by making healthy meals, driving children to school, taking loved ones to appointments, or helping with tasks around the house. This care could be for your spouse, children, parents, or yourself.
  2.  Financial care is the type of care you provide through your paycheck. You and your loved ones may depend on this care to pay the bills, pay off debts like student loans or a mortgage, or help build and maintain the lifestyle you envision for yourself and your family.

Then, recognize the uncontrollable and create financial safeguards to prepare. “Financial safeguards” include family, community, and individual resources that you can develop and draw-on when the uncontrollable happens. There are four major categories of uncontrollable events. Realizing that these events happen and knowing how to plan for them can greatly reduce the hardship you and your family may experience if they happen to you.

  1. Unexpected Expenses include events like your car breaking down or a water heater needing to be replaced.What can you do to prepare?
    • Balance your spending—if your income and expenses are in balance, you should have a little wiggle room for saving at the end of each month.
    • Create an Emergency Savings Fund of $1,000. 
  1. Accident, illness, or injury that requires medical care or attention. In fact, 1 out of every 4 Americans in the workforce will experience an accident, illness or injury that leaves them unable to work for three months or more (Council for Disability Awareness, Disability Statistics, March 2013).

    What can you do to prepare?
    • Get Health Insurance—be sure to review your plan!
    • Get Disability Income Insurance—both short and long-term. This may be offered through your employer (if it is, make sure you understand the policy and its terms). If not, you can get individual disability income insurance to protect your paycheck if you become disabled.
    • Create an Emergency Savings Fund equivalent to 1 to 3 months of expenses.
    • Build a Community and Family Support Network—often, churches have support groups to help with a few meals or mowing the lawn. The importance of support from your family and faith community cannot be underestimated.
  1. Job Loss. 1 out of every 2 people will experience job loss at some point during their working years, often through no fault of their own (Bureau of Labor Statistics, Occupational Outlook Projections, 2010-2020). What can you do to prepare?
    • If eligible, get Unemployment Insurance—check with your state unemployment insurance office to see if you qualify.
    • Create an Emergency Savings Fund equivalent to 3 to 6 months of expenses
    • Develop appropriate job skills and an active professional network—continually developing your skills and professional network creates more opportunities and resources at a time of career transition.
  1. Death with children in the home. 1 out of every 14 people dies while their children are still living at home (The Life Foundation, The Changing Face of Mortality Risk in the United States, 2004). Though this may not seem like a high proportion, the death of a parent can have devastating impacts on a family.What can you do to prepare?
    • Get Life Insurance—while some employers offer group Life Insurance, coverage amounts are often limited and you may need individual supplemental coverage. Term Life Insurance is typically the most straightforward and affordable form of individual protection.
    • Make a Will and Guardianship designation—a will can be written by anyone 18 or older and lets the world know what you want for your assets and especially for your children.

 

Next, start to build. Building your safeguards takes time. Identifying your priorities helps you determine where to start so you can slowly make all these safeguards a reality.

Finally, share your plan. Let your loved ones know what your plan is and how to access the resources you put in place should they need it. Keep a record of your all your resources, contact information and account information and store it in a safe place. Then, rest easy knowing you’ve made steps toward taking back control if the uncontrollable happens to you.