22 Sep Plan B
I want to talk about your Plan B.
It is a bit odd to talk about Plan B’s with people as unfortunately, most people don’t have a Plan A!
For those who don’t understand what Plan A and Plan B mean, to put it simply:
– Plan A is your plan when things go right
– Plan B is your plan when things go wrong
From a financial planning perspective, your Plan A is growing your wealth. It is the part where the focus on increasing your income, getting into the property market, investing in superannuation and enjoying life.
Your Plan B is when you are unable to focus on Plan A.
Let me ask you a personal question – what is the most important thing in your life right now?
What thing is driving your decisions going forward?
For some people, they would say their family. They feel a sense of belonging, entertainment with safety with their family. This may be their partner and kids, or their parents, or their extended family. For some people, the family is the most important thing for people to consider.
For some people, they would say their friends. Friends are people who you have decided to let into your life because they bring something special to it. You have chosen your friends carefully, unlike your family for whom you have no choice on.
For some people, it is their career. They are passionate and driven about what they do, and they can easily work 60 to 80 hours per week on projects and tasks that give them a sense of identity and purpose.
For some people, it’s their sporting team. It is amazing the money, time and dedication of some fans. If their team wins, it means they are going to have a great week. If they lose, then stay well away from these people!
We Protect What We Love
Regardless of what is important to us, the common theme tying these things together is a need to protect what is important to us. We protect the people, projects and things that are important to us.
For example, if you saw two random bozos fighting it out on the street, there is a very high chance you will stand back and watch (or get your camera out and put it on YouTube).
But if it was one of your mates or family members in that fight, there is a very high chance you will get in there and back them up. Because we want to protect the people who are important to us.
Now let me ask you another question – what is your number one asset?
For some people, they will say their house. It is something they have worked hard for to firstly get and then (hopefully one day) pay off the mortgage. This is the place where they spend time with their loved ones and space where they can play, relax and be creative in.
For others, they may have pride and joy in their car. Or a boat. Or a jetski.
In this instance, I think that saying your house, car or some other item is your greatest asset is incorrect.
Because The Number One Asset You Have Is Your Ability To Earn An Income
Without your income, you cannot afford your mortgage repayments.
Without your income, you cannot feed yourself and your family.
Without your income, you cannot send your kids to good schools.
Without your income, you cannot go on holidays, buy nice clothes and give to others in need.
All of the things you won’t see, do and will require an income.
Your income is your number one asset. From a financial perspective, your income is the most important to you.
So my question to you is this – if your income is the most financially important thing to you, have you got protection for it?
If you were unable to generate an income for a certain period, how long will you be able to live on your existing savings? For the approximately 40% of people who live paycheck to paycheck it wouldn’t be too long.
If you lost your income, how would you afford your mortgage repayments? How would you afford to send your kids to school?
Or even worse, if you were to pass away, how would your partner and children be able to cope financially?
This is why I am so passionate about developing a Plan B. Because ultimately we are all human and things to go wrong. But those who have a Plan B in place are the ones who can ride these things out. Those who have a Plan B in place don’t have to worry about the financial issues in their time of need; they only have to worry about getting better.
If you had a car and drove around without car insurance, most Australians would think you are nuts!
If you owned your own home and didn’t have home and contents insurance, most Australians would think you are nuts!
But so many people are earning good incomes and don’t have any insurances for themselves or their family. I think this is equally nuts.
I have been in financial planning for over seven years now. Whenever I meet with customers I always ask them what are their long-term goals and aspirations – in other words, where do they want to be in five years time. No one has ever said to me “I will work for a couple of years before being hit by a bus” or “My goal in 2020 is to get a house and stage four cancer.”
No one ever plans for things to go wrong. But the simple fact is we live in a world where it highly likely things will go wrong at some stage for you.
And that is why you need to have a Plan B in place.
What Is A Good Plan B?
A Plan B that protects you and your family in the event you were unable to work due to injury or illness or if you were to pass away.
A Plan B that understands the reasons why no one should hold all of their insurances fully inside their superannuation.
A Plan B that if set up in your 20s and early 30s can save you hundreds of thousands of dollars over the long term.
A Plan B which can cost out of pocket as little as what you are currently paying for your mobile phone.
If you have not spoken to a financial planner about financially protecting your loved ones, you need to make this a priority.
Speaking to your super fund or a product provider online or over the phone doesn’t count.
You need to speak to a financial planner, so you are aware of the ins and outs of personal insurance cover.
Because I want you to have this discussion about your Plan B now while you are “fit and healthy”, rather than having this discussion before it is too late.
If this is a topic that you would like to discuss in more detail, please go to www.MasterYourMoneyNow.com.au/getstarted to book in your complimentary 30 minute strategy session.
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Disclaimer: This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs. Past performance does not guarantee future returns.
Chris Carlin is an Authorised Representative (No. 1235031 for financial services and No. 514748 for credit) and Master Your Money Now Pty Ltd ABN 65 627 229 681 is a Corporate Authorised Representative (No. 1265677 for financial services and No. 514747 for credit) of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523