Provide a Safety Net for Your Family

by Stacy Francis, CFP®, CDFA

I spent last night in bed with the latest Eckhart Tolle book and, not surprisingly, it got me thinking about the ever-changing nature of the universe. From Sartre to the Dalai Lama – this is one of the few things on which all the wise men agree. No matter how much we wish it would, nothing remains the same forever, and especially not our life situations. We get promoted, lose jobs, relocate, marry and get divorced, have children, and lose relatives. As though this weren’t enough to keep us up at night, all these things affect our finances. While the following four actions most likely aren’t enough to make you the next Buddha, they may very well add an hour or two to your shuteye.

1. Leave some equity in your house. That way, if you (or someone in your family) run into difficulties, you can always free up cash by upping your mortgage. But as nothing is more frightening than drowning in debt, save this option for emergencies only.

2. Keep a credit card you don’t use, for code reds only. As you may have noticed, when you don’t use a card, the issuing bank tends to up your limit to tempt you to use it. You can, but only when you have no other choice.

3. Keep a financial “cushion” – enough money to get you through six months without a job. No matter how secure your current employment feels, there is always an element of uncertainty. Put this money to work for you so it doesn’t get eaten up by inflation, but make sure it’s in liquid investments only so you can access it quickly and easily, should disaster strike.

4. Diversify your portfolio. While some investment risks are impossible to insure against, keeping your money in a variety of securities, industries and countries will certainly dilute many of them.

Stacy Francis is president and CEO of Francis Financial, Inc., a fee-only wealth management practice dedicated to investment advisory services for women, couples and those experiencing divorce. She is also the founder of Savvy Ladies®, a nonprofit organization that educates and empowers women to take control of their finances.

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