Stress Testing Your Financial Security
Stress Testing Your Financial Security
Nothing highlights the need for preparedness like a pandemic. At Covenant Wealth Strategies, we educate our clients about the importance of having a strong financial foundation. Difficult times are a valuable opportunity to stress test your financial security.
Principle 1: Keep 3-6 months worth of savings in the bank.
Nobody enjoys being hit with unexpected expenses or a loss of income. For the individual who is prepared, these circumstances are less likely to have a devastating effect. Having 3-6 months of savings is a good safety net to guard against sudden changes in income or expenses.
Principle 2: Make sure your estate planning documents are completed and up to date.
Most people have never gotten around to completing their estate planning documents including wills, powers of attorney and healthcare directives. For those of you who already have estate planning documents, how long has it been since you have reviewed/updated them? Due to life’s many changes, it may be appropriate to have an estate planning attorney look over your documents approximately every 5-10 years or if you have had a significant change in your circumstances such as a change in marital status, a death in your family, receipt of an inheritance or a change in state of residence. Make sure you also check your beneficiary designations on insurance policies and retirement accounts to make sure they match your estate planning documents. Beneficiaries listed on such accounts supersede your will.
Principle 3: Be prepared with risk management and insurance planning.
The best time to verify that you have appropriate insurance is before a problem arises. Be sure to review/consider things such as your employee benefits as well as individually owned life insurance, long term disability insurance, long term care insurance, home owners and automobile insurance and liability umbrella insurance.
These are just a few of the ways we help our financial planning clients prepare for the unexpected. If you are looking for a financial advisor to help you navigate challenging times, please reach out to our team at Covenant Wealth Strategies contactus@covenantwealthstrategies.com or call us at 302.234.5655 to set up a mutually convenient date/time to speak.