While we call BS on money stress, once in a while catastrophic surprises can derail you–especially if you’re not prepared for them.
Of course, you shouldn’t go around with a feeling of gloom and doom hanging over your head always expecting disaster to strike. But, if you don’t give some thought to planning more security into your life, the consequences of a surprise can take a pretty hefty toll on your path to Financial Freedom.
Surprises Will Happen, It’s Life!
Unfortunately, most people don’t plan for surprises, and as a result, they put themselves in the dangerous position of being vulnerable to financial ruin.
Vulnerability that, when you’re Financially Free, you won’t have.
As you’ve probably guessed by now, the 4% of those who have Financial Freedom know they’re protected in an any unexpected life event. And that raises the question: How do the 4% build the right safety net to protect their family?
How Can You Protect Yourself?
First, identify the gap between your wants and needs. Ask yourself what you would want to protect in the event of a medical catastrophe or a natural disaster. What would give you the peace of mind to not worry about money?
Do you have a number in your head? If so, great! You’ve taken the first step toward easing financial worry.
Next ask yourself, what is my ability to “self-insure?” Or, what do I have at my disposal right now–like a salary or investments–that would help me in a financial emergency?
Once you’ve figured out that number, you may see a large gap between what you want at your disposal and what you actually have.
While the gap may seem stressful, knowing what you need is actually quite helpful. Whether you’d like $10,000 or $200,000, you need a rough number to focus on while you consider the next round of important questions. These are:
- What personal insurances (income protection or disability insurance) do I need to cover the gap?
- What roadblocks am I facing that will prevent me from narrowing the gap? This could be credit card debt or any other debt standing in your way.
- What easy changes can I make so I can narrow the gap?
What’s Your “Just Right” Amount?
The MindShift.money philosophy on insurances is summed up perfectly by the children’s story “Goldilocks and the Three Bears.”
You don’t want to be sold into having more than you need, and you don’t want to take the risk of having less than you need.
You want to have just the right amount acting as safety net for you and your family.
Figuring out the perfect number that will protect you while you’re on the road to Financial Freedom and working toward becoming self-insured is the goal!
In Video 4 of our Financially Fit Bootcamp (Module 4), we discuss exactly what you need to protect yourself in the event of an emergency, how to build an Emergency Buffer and explain the different types of insurance so you can purchase the protections that make the most sense for you.
To find out more about the Financially Fit Bootcamp, click here.
Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.