Greensboro, NC -- Financial preparedness isn't just having a lot of money at your disposal.
Matt Logan of Matt Logan Inc, shared his top three ways to be financially prepared.
One of the basic ways to prepare is through insurance. You need insurance. You need to have health insurance, disability insurance and life insurance. Many times this is as easy as signing up through your employer. Insurance is almost a dirty word these days, but it definitely serves its purpose. While I hate paying that health insurance premium every month, it is never a question as to whether to keep it or not. Health emergencies and the high cost of healthcare can cause major problems for you financially if you have no coverage. Disability insurance coverage is again something we hope we never have to use. For many of you, your most valuable asset is your ability to earn an income and if something occurs that takes away that ability, it can cause great financial hardship. Life insurance is also a very important part of everyone's financial plan and can be used in a number of ways to mitigate risk. These types of insurance do not even include property and casualty coverage as that is outside of my practice.
CASH ON HAND.
An emergency fund is another way to be prepared financially. We never hope to have a financial emergency but we all have friends or family who have been through one. Cash is a very important way to avoid an immediate financial emergency. Cash can allow you to get by without income or to pay for large unexpected expenses. Some people call this an emergency fund. Having access to cash in the event that you lose your job, need to buy a new water heater or have to pay some large medical co-pays. I usually recommend 3 months of cash as a starting point for people to have in their savings or money market account. This cash should be easily accessible and will help you out in an emergency. It should never require that you pay a penalty to access it. It is also the basis to a financial plan as that cash can also allow you to invest for the long term.
Certain documents are very important and should be kept readily accessible if you were to have some sort of natural disaster occur. For those of you looking for what to do in the case of a disaster, you can also look at the FEMA website. The websitewww.ready.gov has a ton of information. It also lists a number of items that you should have readily available. I am not talking about being a "prepper" or anything like that. I am talking about having a safe that would hold important documents. These documents would include insurance policies, deeds, copies of birth certificates, passports, and a list of account numbers for checking, savings and investment accounts. Another item that should be held along with these is some cash to be able to get by with if need be. The good news is that we are not directly on the coast or in an earthquake zone so we are not as prone as some areas to these major disasters.