A huge part of doing good financial planning is risk management. You can build up all the assets you want, but if you lack the proper risk management, it will mean nothing. You could lose it all.
So what are the biggest risks you face and how do you protect them? Let’s dive into it.
1. Being unable to work due to a disability
Disability Insurance protects against this. Disability insurance helps you lock in your income if you are ever unable to work due to a disability. This is something everyone should consider. Losing your income as a millennial would be catastrophic to your future.
2. A Major medical expense
Health Insurance protects against this. Everyone hates medical insurance but understands the value of it. If you get sick, you could have hundreds of thousands of dollars of costs. Protect against that.
3. Loss of job/income
This is similar to #1, but this is more about losing your job due to something other than a disability. This is one of the few areas where protection is not insurance based. You protect against this by having an emergency fund. Do not overlook this step!
4. Loss of spouse and caring for kids alone
Losing a spouse, even one that is not working can have a huge impact. Let’s say the stay at home spouse were to pass away, think of how much you would have to start to pay in child care to cover that role. It would be a lot. This is why you get life Insurance, to protect against the loss of a spouse. Both need it!
A huge part of building a solid financial plan is focusing on accumulation while also protecting against the large risks that could be huge setbacks. Do not skip over the protection pieces.