Disaster Planning
There are many disasters that can befall a family: flood, fire, earthquake, and tornado. Others are a bit more personal: sickness, disability, and death. Because these are all financially devastating, insurance is available to help out if you suffer one or more of the calamities.
There is one other financially devastating calamity that insurance doesn’t cover: loss of your job.
Unemployment is sweeping this nation with the speed of a pandemic flu. While the construction and financial sectors are obvious centers of this disease, it is and will continue to spread across almost every industry.
Since there is no company from which you can buy insurance to cover the financial loss from its occurrence, you will need to “self-insure” against its possibility. Here are a few tips how to do so.
Make yourself valuable to your current employer. If there are layoffs ahead, you need to do what is needed to ensure that you’re at the bottom of the list. Are you the one who works throughout the day or are you just doing the minimum to keep the boss off your back? When volunteers are needed to stay late or come in early to get an order out, do you shuffle toward the back or step forward and take the assignment? Are you back a few minutes early or a few minutes late from lunch and breaks? Do you sit and complain, or do you present solutions?
Make yourself valuable to your next employer. Even if you are the model employee, you might still get laid off, or the company itself could fold. So how are you positioning yourself to be at the top of the hiring list for your next employer? Is your resume up-to-date? (Word to the wise: don’t prepare you resume when you should be working at your current job.) Are you networking with others so that you know what openings are available? What skills are you adding to your repertoire?
Consider getting that degree you’ve been putting off or that certification that’s becoming standard in your industry. Sure, your current employer knows that you are just as good as the degreed folks…but will the person reading your resume be comfortable making that assumption?
Make your spending and savings survivable if you are downsized. Consider the people on Wall Street who are losing their jobs. Not only are they unemployed, but tens of thousands like them are also seeking employment at the same time there are fewer jobs to go around. When there is a great demand for jobs and little supply it will take a long time for many to find work at the pay scale they are used to. The same can happen to you.
Take time now to add some cushion into your budget. Aim to spend 10% less next year than you did this one. Use this 10% to pay off some of your debts. Build up an emergency fund sufficient to cover your needs while you look for a new job. If you still have money left over, build up your retirement accounts.
Long before your job is in peril, you should be doing what you can to insure it. The premiums you pay by way of time and effort will be cheap compared to the financial disaster that would befall you if you weren’t insured. And if your job doesn’t go away, guess who’s next in line for that promotion!
Gary Silverman, CFP® is the owner of Personal Money Planning, a financial planning and investment management firm located in Wichita Falls. You may e-mail him at Gary@PersonalMoneyPlanning.com
