• About
  • Mortgage Basics
  • $40K Challenge
  • Aunt Doris
  • Grandfather Says
  • Privacy
  • Archives

Len Penzo dot Com

The offbeat personal finance blog for responsible people.

100 Words On: The Importance of Having a Financial Back-Up Plan

By Len Penzo

Everyday, people lose their jobs, become seriously ill, and suffer other hardships that strain their household finances. Even so, a sobering study by State Farm found that 55 percent of those surveyed don’t have a back-up plan for weathering a long-term financial crisis that may occur due to unexpected circumstances. I have three back-up plans: a) adequate life, health, home and auto insurance; b) an emergency fund with six months of living expenses; and c) albeit small, a secondary source of income.

The bottom line: Life happens. It’s your responsibility to prepare as best you can for whatever it throws at you.

Photo Credit: US Army Corps of Engineers Public Affairs

23 Comments June 15, 2017

Comments

  1. 1

    nansuelee says

    Great post, especially the “Bottom Line.” Working in a credit union we see daily what happens when folks do not have a plan or take to heart that it is their responsibility when stuff happens.

    Reply
  2. 2

    krantcents says

    Stuff always happen and having some reasonable plan to handle it allows me to sleep at night. In addition to the usual insurance, I have built up a lot of sick time (over 100 days) which I can use for retirement in 6 years. Keep a low cost lifestyle also helps if something happens.

    Reply
  3. 3

    retirebyforty says

    Yeap, have a back up plan. Even if it involve moving back in with your parents.

    Reply
    • 4

      RD Blakeslee says

      *Chuckle* Good idea, except I’m 86 …

      Reply
  4. 5

    Len Penzo says

    @nansuelee: I’m glad you enjoyed it — I hope it wasn’t too long. 😉 Seriously though, like I said, although some catastrophes will overwhelm us no matter how much we prepare, I still believe it’s our obligation to do the best.

    @krantcents: Sweet deal if you can get it. I think my employer allows us to cash in 25 percent of our unused sick time upon retirement.

    @40: LOL! I guess that is a back-up plan, isn’t it?

    Reply
  5. 6

    Everyday Tips says

    It was interesting, I was having a conversation with a co-worker from India one day at lunch. I had a hard time understanding him, but I think he said that where he is from, it is a given that people all focus on having a secondary income, just in case something happens to the first income. Very interesting that it is just a given that a second income stream will be created by one person.

    Reply
  6. 7

    Squirrelers says

    Problems can and do happen in people’s lives. While the chance of any one problem might seem small, when you mathematically assess the chance of just ONE of them occurring, it’s a different story. Stuff happens. So be prepared, even though you might not know exactly what might be coming down the pike!

    Reply
    • 8

      Len Penzo says

      Yes, those probabilities do add up, Wise Squirrel. The odds are we’re all going to get hit the “reverse lottery” at least once or twice during our lifetimes, so it pays to be prepared.

      Reply
  7. 9

    Robert @ The College Investor says

    I couldn’t agree more! I always like to think of the worst case scenario, and how well prepared I am to cope with it.

    Reply
  8. 10

    Carlos Sera says

    Losing your job, getting sick or growing old is expected. The chances are that someday you will lose a job, get sick and since the alternative to growing old is unacceptable, I suggest you plan accordingly. As a planning device you should ask the question, what would I do if I had to leave my country at a moments notice and relocate to a country where I had no money and didnt speak the language? This was the situation most Cuban exiles from the 1960s encountered. We as citizens of the United States dont think about things such as this because of our global status, but to many in the world it is very real. If you can answer that you would be fine given this extreme scenario because you would have either created access to funds or you have a readily transferable skill then you are way ahead of the game. I congratulate you. If not, its time to get moving.

    Reply
  9. 11

    Jayson says

    It’s better to have plan B, C, D, and so on. Nowadays, the only best thing to do is to have back up plans because what we plan doesn’t happen all the time.

    Reply
  10. 12

    RD Blakeslee says

    One of the blessings of a good marriage is the “backup” each spouse is for the other.

    Several time in our 53-year-marriage, my wife left her own pursuits to earn extra money for awhile.

    Reply
  11. 13

    RD Blakeslee says

    … and when you are old, the most important product of your marriage (if God gives you the gift of them – I could write reams about gifts of God as “backup”) are your children. Each member of the family is backup for all the others.

    Reply
  12. 14

    Miguel says

    I’d just add that, even if you are insured, an umbrella policy can be a good idea. You can get millions of dollars of coverage over and above your regular policies for a few hundred dollars per year.

    Reply
  13. 15

    Adriana @MoneyJourney says

    Sometimes we think we’re invincible until one day when, like you said, life happens! It’s always best to be safe than sorry!

    Reply

Trackbacks

  1. The Do’s and Don’ts of Building an Outdoor Fire Pit - Len Penzo dot Com says:
    June 28, 2017 at 5:15 am

    […] This can affect the cost of your homeowners’ insurance premiums which will only cause more financial […]

    Reply
  2. The Do’s and Don’ts of Building an Outdoor Fire Pit – Len Penzo dot Com says:
    June 30, 2018 at 6:06 pm

    […] This can affect the cost of your homeowners’ insurance premiums which will only cause more financial […]

    Reply
  3. The 13 Most Important Items Everyone Should Keep in a Fireproof Safe – Len Penzo dot Com says:
    August 11, 2018 at 5:10 pm

    […] policies. Home, life and auto insurance policies are a key part of any financial back-up plan. If your house burns down or has been burgled, the first thing you’ll want to get your hands […]

    Reply
  4. A Homeowners Insurance Primer for Newbies – Len Penzo dot Com says:
    June 23, 2019 at 10:49 am

    […] people understand the necessity of purchasing homeowners insurance to protect one of the largest investments they will make during their lives. But it is also vital to understand the types of coverage that […]

    Reply
  5. The 13 Most Important Items Everyone Should Keep in a Fireproof Safe – A Rewards & Savings Maximization App says:
    October 11, 2019 at 10:32 pm

    […] policies. Home, life and auto insurance policies are a key part of any financial back-up plan. If your house burns down or has been burgled, the first thing you’ll want to get your hands on […]

    Reply
  6. STK 267: Who Should Pay for College? And Other Family/Money Questions » The Stacking Benjamins Podcast says:
    June 2, 2020 at 5:20 pm

    […] Len Penzo: 100 Words On: The Importance of Having a Financial Back-Up Plan […]

    Reply
  7. 5 Things Nobody Tells You About Being Poor – And for Good Reason – Len Penzo dot Com says:
    December 14, 2020 at 4:15 am

    […] paying for satellite television service they can’t afford? Why Cracked is cracked: Stuff happens to everybody at the worst time — poor and rich. It’s called “life.” And […]

    Reply
  8. 5 Things Nobody Tells You About Being Poor - And for Good Reason - Today Financenews says:
    December 17, 2020 at 9:21 am

    […] paying for satellite television service they afford? Why Cracked is cracked: Stuff happens to everybody at the worst time why […]

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The Question of the Week:

Should you be allowed to opt out of Social Security?

View Results

Loading ... Loading ...

Recent Posts

  • Black Coffee: Playing a Losing Game
  • Can Scheduling a Spring Tune-Up Save You Money?
  • The High Cost of CBD Oil: Why Is It So Expensive?
  • Understanding Slips and Trips: How Not to Get Caught Out
  • Here’s How Solar Power Can Save You Money
  • 5 Reasons Why Gold Is The Best Metal To Invest In
  • 8 Smart Alternatives to Wasting Your Money on a Lavish Wedding
  • 9 Ways to Use Your Money After the Mortgage is Paid Off
  • Black Coffee: The Ignorant and the Apathetic
  • Understanding Life Insurance: Does a Superhero Like Batman Need It?

Disclaimer

This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice. In fact, making investment decisions based on information published here, or any other website for that matter, is more than unwise; it is folly. This website accepts advertising in the form of monetary and other compensation; as such, topics of discussion are occasionally influenced by these advertisers. Sometimes, an article may also include affiliate links, meaning, at no additional cost to you, this blog earns a commission if you click through and make a purchase (for example, as an Amazon Associate I earn from qualifying purchases). Remember, you and you alone are responsible for the decisions you make in life, so please contact an independent financial professional for advice regarding your unique personal situation.

Sign up for the weekly Len Penzo dot Com newsletter
Len Penzo dot Com Delivered Weekly
Join more than 30,000 readers and fans who enjoy personal finance and macroeconomics with an offbeat twist!
Invalid email address
Thanks for subscribing!

Popular Now:

  1. 1. The 7 Most Popular Ways to Commit Financial Suicide
  2. 2. 25 Examples of Shrinkflation That No Longer Fool Consumers
  3. 3. The 10 Worst Things I Ever Bought
  4. 4. 7 Perplexing Money Questions Without a Good Answer
  5. 5. My Cola Taste Test: Is Coke Really Better Than Pepsi?
  6. 6. Planning a Wedding? Here Are 9 Ways to Ensure You’ll Pay Too Much
  7. 7. Economic Collapse 101: How to Prepare for Water Supply Disruptions
  8. 8. A Simple Test to Know If It’s Better to Rent or Buy a Home
  9. 9. The Big Secret the Banking Industry Doesn’t Want You to Know
  10. 10. 4 Good Reasons Why Some Quarters Are Painted Red

All-Time Most Popular:

  1. 1. 19 Things Your Suburban Millionaire Neighbor Won’t Tell You
  2. 2. Dear Friend: Here Are 41 Reasons Why I’m NOT Lending You the Money
  3. 3. Why Your Expensive Luxury Car Doesn’t Impress Smart People
  4. 4. If You Can’t Live on $40,000 Annually It’s Your Own Fault
  5. 5. 21 Reasons Why Corner Lots Are for Suckers
  6. 6. 4 Smart Reasons Why College Isn’t for Everyone
  7. 7. 18 Fast Facts About Social Security Numbers
  8. 8. My Ketchup Taste Test: Upset! Guess Which Brand Topped Heinz
  9. 9. Why I Prefer a Spreadsheet to Track Expenses and Manage My Finances
  10. 10. Here’s a Simple Trick for Getting Credit Card Interest Charges Waived

Copyright © 2021 Len Penzo dot Com · All Rights Reserved · Designed by Nuts and Bolts Media

© Len Penzo dot Com 2008–2021