You wouldn’t start a race without a flat repair kit for your bike. In the same vein, you’ll want to make sure that you are protected against the various risks that life involves.

On this episode of Money Mile, we’ll consider risk management and how to come up with a contingency plan for the random financial issues that could arise to throw you off course.

Join me for a mile-sized bit of financial education that can help you stay on track on your road to financial independence. Press play to get started.

You will want to hear this episode if you are interested in…

Be prepared for any eventuality

Imagine yourself riding the race of your life. You’re sprinting down the road well ahead of your best time when suddenly you hit a rock and pop your front tire. If you’re unprepared, you’ll find yourself stranded on the side of the road hanging your head in defeat as you wait for the race support vehicle. However, if you prepared ahead of time, you’ll have the skills and supplies you need to fix that flat and get back into the race.

In the same way that you prepare yourself for the major eventualities that could occur during a triathlon, you’ll want to be prepared for the monkey wrenches that life could throw at you.

The 5 main financial risks

There are five primary financial risks that could derail you from your road to financial independence.

  1. Medical costs – Whether it’s a $2,000 trip to urgent care or a $200,000 cancer diagnosis, you need to be prepared for any eventuality. Adequate medical insurance can help you through.
  2. Damage to personal property or others – If another person is hurt by you or on your property, you’ll need to have insurance to cover a lawsuit.
  3. Loss of income due to illness or injury – If your income is interrupted by a long-term illness or serious injury, how will you pay the bills? Disability insurance can help you through this time.
  4. Premature death – If you or your partner passes away earlier than anticipated, your dependents may still rely on your income or care. Term life insurance can help to ease the financial burdens during this time of loss.
  5. Long-term medical care – Long-term medical needs could be due to a major injury or a decline in cognitive abilities due to an illness like Alzheimer’s. Having a long-term care plan doesn’t necessarily require you to have long-term care insurance. Long-term care insurance is costly and can change over time. The best alternative is to have a robust nest egg.

A healthy cash reserve can offer protection against many risks

The best thing you can do to protect yourself from any of these risks is to have solid cash reserves. The general consensus is to have 3-6 months of expenses set aside to cover any eventuality.

Having cash reserves on hand can help you while you work things out with your insurance company, they can cover the bills while you take time off to nurse a sick loved one, or to help you pay doctors’ bills while you recover from an accident.

If you thought this episode was a valuable part of your run, share it with your running group or triathlete friends. We want to reach as many people as possible to spread financial wisdom so that more people can pursue the path to financial freedom.

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