Principle #5: It May Not Happen, But It Can
When you're young, you don't think about old age or death. When you're healthy, you don't think about getting sick. When you're living a normal, quiet life, you don't think about getting into an accident. When you have a nice, cushy job, you don't think about financial catastrophes.
You'd think "It couldn't happen to me." But the thing is, it can. Of course, the probabilty of you dying when you're healthy and twenty five is small. The likelihood of you being hospitalized when you're living a healthy, active lifestyle is low.
But should you wait till you're sick, or disabled, or laid off, or dying? You can say the same thing about your properties like your house and cars.
For forget about probability first. I want you to play a game called "What if?" It's simple. Just ask yourself:
- What if I get fired from my job?
- What if my business goes belly up?
- What if my house burns down to the ground?
- What if get into a car accident?
- What if I get disabled?
- What if I get cancer?
- What if I become diabetic?
- What if I die?
Does all these sound morbid? The thing is, we avoid thinking about these things because a.) they're unlikely to happen, b.) you have too many problems to even think about these things, c.) you just don't want to think about it.
But instead of burying your head in the sand, be honest to yourself and ask these questions. You don't have to have the "right" answers. Just be honest.
Say, if you lose your job, maybe your spouse's income can sustain your expenses for six months. Or maybe, you have enough cash stashed away for three months.
If you get disabled, say you have rich parents who can and are willing to support you for life.
Or you discover you have a heart problem. Your company has a group health care plan that gives you coverage.
If you die, well, maybe there's not much financial loss since you're single and just started working.
On the other hand, say, your car gets carnapped. You only have the basic mandatory insurance. What do you do then?
Or you get sued because a customer in your restaurant got food poisoning. What do you do?
Maybe you travel a lot, but you're not insured at all. And your wife is a stay-at-home mom. What will happen to them if a plane crash happens?
So, as you ask these "what if" questions, you get a clearer picture of the possible responses to what could happen.
There are two other questions that you need to answer. And I'll discuss them in the next issue.
