The Importance of Emergency Funds
What does your financial plan for emergencies look like? The Federal Reserve recently did a nationwide study that showed 40% of Americans likely could not afford a $400 emergency expense. If your clients have less than $400 saved up to deal with emergencies, how can they save for retirement? Having good financial wellness sets you up for a secure retirement and having an emergency fund is a good first step.
Think about this: the odds of you having to make a significant claim on your homeowner’s insurance are about 3 in 100, and the odds of totaling your car are about 18 in 100. However, no one bats an eye at paying for homeowner’s insurance or car insurance. People have these types of insurances to protect them in case of an emergency. The odds that you’ll need long-term care are 72 in 100, but less than 30% of Americans over the age of 45 have long-term care insurance. A long-term care insurance policy mitigates the risk that you will need that kind of care later in life.
Talk to your clients about financial wellness. Have them start saving an emergency fund, and once they reach their goal, show them how they can transfer risks of emergencies to an insurance company for pennies on the dollar.
See you after your next meeting,
Tom Hegna
