Preparing For The Unexpected & Inflation With The Happy Hour Ladies
Today is the last Friday of the month and my regular listeners know that on the last Friday of the month, I host the happy hour on the podcast where I gather great friends with me to drink cheap drinks and talk about money topics. I have been a financial planner for over 10 years now, and if there is one important message I can communicate about financial planning for your life is that the unexpected is guaranteed. No matter how much we can plan and plot out life, we are bound to be confronted with the unexpected and frequently when we are, it’s at a surprisingly large expense to our finances. We’ve all had a front row seat to the unexpected during the pandemic, but I’ve witnessed anything from a lost job, to a surprise baby, to a house fire and everything in between. Joining me today are my friends to share how they plan for the unexpected and share some best practices for you to implement on your own.
What are we drinking?
Melanie from The Mental Health and Wealth Show - A homemade mocktail made from coconut water, raspberry vinegar, lime juice, and rosewater
Joy, Certified Level 2 Trainer & Head of Trainer Academy & Head of Trainer Academy - Chilled Red Wine from her Wine Box Subscription
Kassandra from kassandradasent.com - on vacation, living her best life, and not recording with the Happy Hour ladies today.
Shannon - Boxed rosé
Podcast Notes
Planning for the unexpected has been on Shannon’s mind quite a bit lately, and she spent the last month recording podcast episodes about different insurances and planning for unpredictable circumstances.
The world we have been living in the last two years has been tough, and the future continues to be uncertain. Between inflation, gas prices, the stock market, and people losing their jobs, it’s time to start planning for the unexpected.
Normalize that life happens and things will come up. Shannon always says, '“The only surprise about a $1,000 expense is what kind of surprise it will be.” It’s not “if”, it’s “when”. Avoid wishful thinking and know things will happen.
Joy talks about how planning for financial uncertainty depends on each person’s style in addition to the level of stress and anxiety they feel when life happens.
In uncertain times, the best way to prepare is to have cash. Holding onto as much cash as possible is the goal.
Each client of The Financial Gym gets a plan, and one of the first goals is to build a 3-6 month emergency fund. This way there is a cushion for unexpected expenses or other life events.
From there, it’s about the sinking funds. These are separate funds specifically earmarked for certain expenses. These can look like a ‘car fund,’ ‘home repair fund,’ or ‘travel fund.’
Having these specific funds can help calm anxieties.
There is also a different mentality about an account labeled ‘tax bill’ vs. ‘summer beach home’.
Melanie talks about how she is not immune to the headlines and the looming recession is scary. She is stressed about a lot of things, but this time around, she is more prepared. She is able to deal with the shift of income because she is debt-free and she has a cushion of savings. She also took inventory of her community resources and thought through the worst-case scenario. She knows there is a safety net and that helps keep her out of the scarcity mindset.
If you’re planning for the unexpected, and are short on cash, the next step is to look at all of the credit you have available. When you are heading into the worst, it is important to keep as much cash as possible. Sometimes that means the balances on the credit cards will grow temporarily.
Shannon talks about how she’s been in this position personally and knows it’s not comfortable.
Debt is not moral or immoral. It is a tool. Deciding to use credit cards as a tool intentionally, and ensuring there is a plan on the other side feels better than unintentionally slipping into debt.
If you can consistently make your minimum monthly payments, you can maintain your credit score. There is always a solution for debt, so don’t feel guilty if you need to utilize this tool.
Most people wouldn’t recommend going into credit card debt, but when we’re talking about planning for the unexpected, you have to think about all of the tools available.
Other ways to think about preparing for the unexpected
Consider insurance. Ask yourself are you covered in case you lost your job? Do you have enough cash saved or a credit line open to cover your deductible? For pet insurance, you often have to pay upfront and wait for the insurance to pay out, do you have the cash?
If you own a home, can you take out a home equity line? The process takes a little bit of time, but those steps can be taken.
There are proactive ways to ease anxieties in the air. These are tactical ways to create backup plans for yourself. Go through your inventory of solutions and think about what your budget looks like if there is a job loss. Think about how to keep a roof over your head, and make a plan.
When life is happening and everything comes all at once, no solution is going to feel great. Sometimes, you have to make really hard choices, and it might even feel like you’re setting yourself back. But you’re not. It’s about preserving your mental health and allowing yourself to be prepared for this chapter.
Don’t be afraid. Prioritize your mental health, physical health, and try to keep as much cash in the bank as possible. Shannon reminds us that even in a shitstorm of financial challenges, everything is fixable.
Drop any guilt, shame, or judgment around the choices that need to be made.
It all feels better on the other side when you intentionally make choices, rather than having to make them in the middle of a frantic panic. The plan might not be pretty, but the more confident you can go in with these tools, the better you will feel.
If you’re a client of The Financial Gym, your trainer can talk through a game plan if you’re feeling anxious. If you’re not a Financial Gym client and want to make a game plan, schedule a free warm-up call to learn more about working with a Certified Financial Trainer.
Takeaway: My biggest takeaway is life will always be filled with unexpected and expensive financial surprises, so putting systems in place in advance of these will at least take away the financial headache portion of the surprise. If you have any topics you would like me to cover on this podcast, or if you’d like to get in the financially naked hot seat, I encourage you to email me at Shannon@fingyms.com, or join the private Martinis and Your Money Facebook group, and let me know what you want to hear.
We have a lot of exciting things happening at Financial Gym in 2022, but the most exciting has to be our Certified Financial Trainer Licensing program. If you are a personal finance nerd with a passion for helping others, this is the course for you. It’s based on my 10 years plus of helping people get financially healthy and led by my amazing team at The Financial Gym. We’re about to start raising the pricing, so if you’ve ever thought about doing something like this don’t waste any more time, head over to financialgym.com and under our services, you’ll find more on the Certification Program