Financial Resilience Requires Planning
Paul Fain, CFP®
With approximately nine weeks remaining in the year, it is an opportune time to review your personal financial plan.
I encourage you to take a “financial resilience” self-audit. Is your financial plan ready for the unexpected? Are you prepared for future shocks? Building financial resilience into your life requires preparation and planning.
On a beautiful fall day five years ago, I received a shocking phone call: A stomach biopsy was positive for an aggressive cancer. Further testing revealed a tumor that was locally advanced with lymph node metastasis. Not good.
I would like to say I was emotionally prepared to face my mortality, but I was not. Only as my treatment plan materialized did I begin to adjust to my new reality. Fortunately, our financial plan was structured to be more resilient than I was.
We had intentionally built a cash reserve to face the unexpected. Our investments were diversified and regularly rebalanced. I kept good records in a reasonably organized manner. Other than our mortgage, we had minimal debt. By the grace of God, I had updated my life insurance coverage several months prior to my diagnosis. As I started chemotherapy, we expeditiously updated our estate documents (which were quite out of date).
Do not wait until a crisis emerges to test your financial resilience. Plan ahead. Think it through. Do some “What if?” scenario planning. How would your financial plan respond if you faced a serious illness, lost your job or were suddenly gone? What if a storm wiped out your home?
Do you need to review your insurance protection plans? Does your budget need an overhaul before the holidays? With the stock market hitting new all-time highs, should you sell some market gains in your investment portfolio? Do you need to give more attention to your short-term reserve funds? Are you like me and need a kick in the pants to update your estate plan?
Of course, do not overlook your mental and emotional resilience. When my resolve wavered, I found great strength in my faith community, the support of family and friends and the counsel of professionals. I learned to practice self-compassion. I breathed the outside air more deeply. I sat in the sun longer. I set goals for spending time with family, for exercising through treatment and to recalibrate my bucket list.
We can find light through the clouds. Last week, I participated in a career fair at Karns Middle School. We played a save/spend/share game with the students to emphasize the importance of consciously allocating money. I asked one eighth-grader why he emphasized savings. He replied (so matter-of-factly): “It is important to save some money… ’cause you just never know.” There you have it, out of the mouths of babes.
Every day is a gift. May we be thankful.
This article originally appeared in the Knoxville News Sentinel online on October 25, 2024.
