Plan the Unexpected
Planning ahead is vital in minimizing the possible effects of unforeseen circumstances.
DO you remember the last time you have experienced a surprise in your life? A surprise which could be in the form of a birthday, a homecoming, an award or recognition, or an anniversary among the many great moments that you treasure? Have you also gone through an event that did not just surprise you, but gave you one of the most challenging life experiences? An unforeseen scenario that did not only affect you emotionally but, worse, hit you financially? An undesired circumstance such as an accident, a loss of a family member, a sudden loss of job or even a positive event, such as a pregnancy or an inheritance? If all these events in life happen to you, are you prepared for the unexpected?
Let me share with you this story of a family wherein the father was an overseas Filipino worker, the mother a proud housewife and their kids. The family lived in an exclusive village and the children were all studying in a private school. Everything was going pretty well for them until they learned that the father had acquired an illness that would bring a drastic change in their lives. With that, he underwent a series of medical exams and when the results came out, they were told that a particular procedure was required to prolong his life. Upon learning this, they knew that they didn’t have sufficient funds to finance the estimated medical costs and this would even cost the father’s job abroad. Still, the father’s life was more important than anything so they decided that he should go through the procedure. And because he did not have any type of medical protection, emergency funds, health maintenance organization (HMO), they ended up selling their house just to cover all expenses. A couple of years after the operation, the father was able to get back on his feet once more. He landed some local projects as a consultant, while his wife managed to get into some “sidelines” that aided them in his continuous medication and the educational expenses of their children.
That cycle went on for more than a decade until all of their children were able to finish school and find their own jobs. The first thing they wanted was to have their own home again so they decided to buy one for their family. But just as they were recovering from the financial struggles, another life-changing event was yet to unfold. The father’s health got even worse and he acquired a couple of new illnesses that required multiple periods of confinements along with a cocktail of medicines. Although the children already had an HMO for their father, it still wasn’t enough to cover everything as it has exceeded the limits due to long confinements in the hospital and numerous professional fees. As their father’s body gave in and succumbed to the complications, they now have to face the cost of losing someone, which they haven’t thought about yet. Only, this time around, it wouldn’t cause a financial implication as their father was able to obtain a life insurance while he was working abroad. Although their father was not a believer in insurance, fortunately, his wife was persistent and was able to convince him to sign up after months of discussions. It proved to be a big relief for the family during the time of grief as it was able to pay off all the memorial costs that were incurred.
You might have heard of a similar story before or you might even know someone who has gone through a more difficult situation. What is essential is that upon knowing these types of situations, you don’t have to learn from your own experience, as you get to learn from their experience so that you can avoid the conditions they have gone through. Planning ahead is vital in minimizing the possible effects of unforeseen circumstances. You should be able to take some time and plan about your career, your health, your dependents, your existing debt, your life expectancy and your estate obligations. Start building an emergency fund, a health and asset protection plan, and an estate plan to protect yourself and your family from risks and unintended burdens. You may also consider having a strategic plan when economic downturns occur to maximize your existing investments. Dealing with such events could or would eventually happen but if you are able to plan the unexpected, the unexpected will no longer be a problem.
John Patrick Sarmiento is a registered financial planner of RFP Philippines. He is a Oracle E-Business suite support analyst at Macquarie Offshore Services Pty Ltd.
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