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The Financial Uncertainty Preparedness Checklist

The Financial Uncertainty Preparedness Checklist

January 13, 2022

Actions you can take now to establish some peace of mind during volatile times

1. Emergency Fund

Establish a savings account with at least six months’ worth of fixed expenses.

If you don’t just happen to have six month’s cash available, start small. Save whatever works in your monthly budget and consistently squirrel it away every month.

2. Regular Portfolio Reviews

i. Are you taking the appropriate risk for your age and time horizon?
ii. Are your holdings properly diversified to manage your risk?
iii. Do you know/understand what’s in your portfolio?
iv. Do you know what the fees and costs are?

Take some time and effort to understand what’s in your portfolio. I assure you it isn’t rocket science. One of the most important benefits I provide to my clients is financial education. When you understand what’s “under the hood” in your portfolio and you are a long-term investor, you will have more confidence and discipline to ride out those rocky parts of the market.

3. Financial Planning

i. Have you defined your short-term/long term financial goals?
ii. Do you know whether you are on track to achieving those goals?
iii. Do you have a budget and savings strategy that is sustainable?
iv. Are you managing/eliminating your consumer debt?

When you have a plan you tend to move more purposely towards your goal. When you don’t have a plan you might find yourself improvising or missing out on certain life opportunities.

4. Goal Planning

i. If you have children, have you set up college savings plans for them?
ii. Would you like to purchase a home? Have you put together a strategy to do this?
iii. Do you have other goals that require financing?

We all have goals that potentially will enrich our lives and our family’s lives. Frequently these goals require a level of financing. (See item #3). The trick is to identify your goals early enough so you have enough time to gather the resources (usually money) necessary to fund that goal.

5. Risk Management

i. Do you have ample cash reserves for a financial emergency? (See item #1)
ii. Do you and your spouse/partner have appropriate life insurance for survivorship?
iii. Have you considered disability coverage in the event you are unable to work?
iv. If you own your home and have significant assets, do you have an umbrella policy?
v. What is your strategy if you need long-term care?

Life is unpredictable but with careful planning, you can prepare for potential unpleasant events.

6. Retirement Planning

i. What is your vision of your retirement?
ii. How much will it cost and will you have the cash flow to sustain it?
iii. Have you reviewed your 401k/IRA portfolio performance recently?
iv. Are you contributing enough to your retirement account?

Waiting to figure out your retirement plan the day after you retire is a very bad idea. You’ve run out of options (unless you would like to go back to work) and you’ve squandered decades of time that could have been used more productively to plan and save for your desired Second Act.

7. Estate Planning

i. Do you have a will and powers of attorney for healthcare/finance?
ii. Have you recently reviewed these documents?
iii. Have you established healthcare directive so your family knows your wishes?
iv. Are your beneficiary designations on your investment accounts up-to-date?

Upon your untimely demise, this is perhaps the single greatest gift you can leave to your family: having your estate documents in order. If you die without a will or you haven’t established agents to attend to your financial and healthcare matters, you’ve created an administrative and potentially costly headache for your loved ones.