On your 54th birthday if your boss says “here is 3 months severance pay” will you be able to take that hit in your solar plexus? That is what I mean by asking ‘are you financially fit’ ? Reminds me of what a friend’s son told her when she asked him “how is boxing practice coming along”. He said “Mom you remember you ran the Full Marathon?..well boxing is like running 42km and getting hit in every km with a cement bag”.
Sometimes you have no clue as to what life can do. I am 55 and now fairly resilient to the hits, but still am vulnerable to boxing hits while running a marathon. So what should you look for to see if you are financially fit?
- Do you have a written down financial plan: Makes a lot of difference – start writing down – if you get a heart attack and die at least people will have the plan. No, seriously, write down your financial plan for the next 20 years and you might suddenly come out with the gaps. Then you know. I am talking of a properly thought out financial plan – not some resolutions made in Jan and thrown out in Feb. A proper financial plan – simple or complex, but available in writing.
- You have good financial knowledge, have acted on them: One of the important ingredients of financial freedom is the ability to know that you have it in you to retire financially. Financial knowledge is a very important part of our overall financial wellness.
- You have taken steps to protect your wealth and your family’s future
Financial resilience requires more than just strong stomach muscles and a strong mind. To be financially resilient, you have to have your financial life on solid ground and be prepared for the unexpected. The first step of wealth protection is to protect against negative events with adequate health insurance. Disability insurance, term insurance, etc are all important.
Build an emergency safety net for things that are not covered by insurance. The bottom line is to prepare yourself and your family for those big life events that can be wealth killers.
- You are financially healthy
Financially healthy means as a state of happiness where an individual has achieved reduced financial stress, established a financial foundation, has multiple streams of income, inflation protection, and created an ongoing plan to help reach all financial goals. Your financial health can go a long way in helping you minimize stress while navigating through those challenges.
Just like you need an annual medical physical, make sure you check in on your financial health at least a few times a year!
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