Take a fresh look at your lifestyle.

Why you should create a financial Plan B

The past week, I had a heart-to-heart talk with one of my bosses, and he asked me a question I struggled to answer at the time we had the discussion. What is the question you might be anxious to know? Exercise some patience, we will get to that in a bit.

Having a financial Plan B as part of your overall financial plan is a big part of ensuring your overall financial well-being. Won’t it be nice if everything in life went according to plan?

You get the job you want and never get fired. You meet the person of your dreams and never break up. Your spouse or parents live forever, or at least until age 100. Plus, you eat right daily, exercise consistently and never get sick or injured.

Sadly, we all know that life simply doesn’t work that way.

Employees, even good ones, lose their jobs all the time. Divorce is a modern-day reality. Parents and other loved ones die before we’re ready to say goodbye. And medical challenges can plague anyone.

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I call all these setbacks “The Dreaded Ds”: downsizing, divorce, death, disability and disease. In short, stuffs happen. And any time a “Dreaded D” strikes, it can throw your finances out of balance and leave you reeling economically.

So how do you cope with life’s inevitable misfortunes and financial shocks? It’s all about creating a good financial Plan B to deal with any scenario. Here’s how to do it.


Ask yourself “What If … ?”

Too often, our financial plans account for only one scenario—a Plan A scenario, in which everything goes according to our original expectations. But as previously mentioned, life can be unpredictable and messy.


So start by asking yourself questions like these:

What if I lost my job? How would I meet my financial obligations?

What if I got sick and couldn’t work? How long could I pay my bills?

What if I passed away unexpectedly? Who would be financially impacted?

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The point of these questions isn’t to turn you into a “pessimist” who envisions a bunch of disasters coming true. Rather, it’s to help you begin to address real-life issues and think about strategies you can take now to financially safeguard yourself against potential future scenarios.

Assess how realistic and prudent each solution might be

As you think through a given “what if” scenario, take some time to consider the viability of each solution to that scenario.

For example, assume you’re evaluating how to handle a potential job loss situation. You might think: To cope with job loss, I could do any of the following: drastically cut my spending, move to a cheaper accommodation, borrow money from a relative, tap into my savings to fund my expenses while unemployed.


Put your Plan B in writing

A written financial plan is always best—and that includes your economic backup plan. So it’s a good idea to put your financial Plan B in black and white and not just have it as an idea or a series of thoughts in your head. Having a written financial plan gives you and your spouse the ability to review the plan and adapt or modify the plan if your circumstances change.


Get needed insurance whenever possible

The main purpose of insurance is to protect against life’s potential risks. So shop around for insurance that can give you both personal and financial peace of mind.


 Invest, invest and invest

The importance of investing cannot be over-emphasised. The mistake many make, {myself inclusive} is that we think we earn too little to invest. From the little you earn, you can invest, you only need the right information. From what I got shortly after the discussion with my boss, I invested into what many will consider very small but I am surprised at what I have earned in just under a week, the good thing is that the principal is still safe somewhere, which I would have spent by the way. So, look for opportunities, take it and pray while understanding that life itself is a risk.

Back to the question my boss asked, and I am throwing that question to you all; What is your Plan B?


Addendum: Last week I promised some nuggets on where and how to get freelance jobs, we will get to that next week. Keep a date!