Financial Strategies to Prepare for the Unexpected

Jordan Maruszak
December 28, 2021

If COVID-19 or Hurricane Ida impacted your finances, you’re far from alone. In fact, the pandemic delivered the highest unemployment rate since the Great Depression, leading to significant job loss, and lost or reduced income, for thousands of people. Ida is estimated to have had an economic impact of $95 billion, including factors such as damaged homes and vehicles, and work disruption.1

 

Financial Strategies to Prepare for the Unexpected

 

Unfortunately, health or natural disasters are just two examples of unexpected events that can derail a financial plan. Major home repairs, medical expenses, legal bills, a surprise pregnancy, a death in the family or unexpected elder care needs — among other events — can all impact your finances while shifting your goals and priorities.

The good news is that you can create safeguards to help get through such situations and limit financial disruption, so you can get back on track faster to reaching your goals.

 

Define for needs, wants and wishes

In general, it can be helpful to create or revisit your financial plan. This typically involves defining your goals, timelines and steps for reaching those targets. In addition, this step usually includes assessing where you are now in terms of that plan, what’s changed and what adjustments you may need to make to get where you want to be.

For instance, as part of the plan, you might break expenses into needs, wants and wishes. You could then create a budget that would cover only your needs and another budget that adds in costs for your wants and wishes. If something unexpected occurs, this approach may allow you to fall back on that needs-only budget or look at the full budget to easily see what you could remove or adjust to fit your current situation.

 

Assess your savings

Another step may be to look at your savings and investments. For many people, it’s helpful to prioritize building an emergency savings fund that lets you quickly access cash in case of an unexpected setback. You could keep the fund in a savings, money market account or short-term CDs. You could also consider a home equity line of credit. Experts typically suggest having enough funds to cover three months of expenses for dual-income households and six months for single-income households.

In general, reacting rashly in the face of a financial crisis may not be helpful. For instance, making significant changes to investments or retirement accounts could cause long-term damage that may be harder to recover from than the initial problem.

 

Evaluate benefits and insurance

For many people, employee benefits may be another pillar of financial support during tough times. If you don’t already understand what benefits you have and how they work, you may want to take time to explore those details. For instance, you may want to consider what happens if you run out of leave time but are too sick to work? And you might also want to keep a backup plan in mind for how you could replace certain benefits if you lost your job.

Insurance could add another safety net. Homeowners insurance may help mitigate losses in the face of natural disasters. Likewise, if you experience the death of a spouse or income earner, life insurance may be able to provide funds for funeral expenses, costs of daily living, debt payments and more.

Trusts may also help safeguard your financial interests in the event of your own untimely death. They may be useful if you want to maintain some control over distribution of assets when you’re gone. For instance, if your heirs are too young to handle a large inheritance or you want to support a special needs child, you might create a trust that distributes funds at a specific age or for specific needs.

 

Talk with a trusted professional

Working with a trusted financial professional may be one of the most important steps to help prepare for unexpected events. At Hancock Whitney, we’re pleased to offer complimentary* financial planning and reviews that can help you plan for and recover from unexpected events — and keep you on the path to reaching your financial goals faster.

Talk to an Advisor

 

1 “Hurricane Ida’s damage tally could top $95 billion, making it 7th costliest hurricane since 2000,” Pippa Stevens, CNBC.com, updated Sept. 8, 2021, https://www.cnbc.com/2021/09/08/hurricane-idas-damage-tally-could-top-95-billion-making-it-7th-costliest-hurricane-since-2000-.html, accessed Sept. 28, 2021

* While the financial plan is free, there will be fees/commissions associated with any investment or insurance product used to implement the plan.

 

The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.

Investment products and services, such as brokerage, advisory accounts, annuities, and insurance are offered through Hancock Whitney Investment Services, Inc., a registered broker/dealer, member FINRA/SIPC and an SEC-Registered Investment Advisor.

Hancock Whitney Bank offers other investment products, which may include asset management accounts, as part of its Wealth Management Services. Hancock Whitney Bank and Hancock Whitney Investment Services Inc. are both wholly owned subsidiaries of Hancock Whitney Corporation.

 

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