Sure bets to enjoy your sherbet

Question: This pandemic has got me thinking about the unexpected risks that I may face in the future, assuming I get through this crisis. I mean, one day you’re here and the next day, maybe you’re not. And I noticed that major crises come in a pattern, appearing almost every 10 years: the Asian financial crisis in 1997, the global financial crisis in 2007 and now COVID-19 in 2019. I cannot imagine leaving my loved ones unprepared to fend for themselves. How do you suggest I prepare for the next major crisis? Asked at “Ask a Friend, Ask Efren” FREE service at www.personalfinance.ph, SMS, Viber, LinkedIn, WhatsApp, Instagram and Facebook.

Answer: There are times when you just want to kick off your shoes and enjoy a solitary moment without a care in the world. During that time, the go-to food would be ice cream. And if you want that cool dessert without worrying about the fat and cholesterol, sherbets would be the natural thing to have. So, here are some musical tips to help you enjoy your sherbet.

Through the fire – You will need to set aside funds that can cover you for emergency situations from simple flat tire repairs to hunkering down under quarantine against virus attacks. While the usual advice is to set up emergency funds equivalent to at least three months of your expenses, given our current pandemic, it would be best to keep at least 12 months of expenses. And because the amount of emergency funds will be large, there is even more reason to keep them in earning liquid instruments like time deposits and treasury bills. Having sufficient emergency funds will get you through the fire, through the limit and through the wall.

One sweet day – Your loved ones will be emotionally distraught if and when you are called from this life. As they will not be in the best state of mind, having a paid-up plan for your funeral service, cremation or burial would be ideal. Just make sure you tell your family where the original papers are located and let them know that you are shining down on them from heaven and that you’ll be together again one sweet day.

Just as long as we have love – You may not have a mansion on a hill or a million stashed away. Still, it would be best to have an updated last will and testament to help pass on with minimal taxes the estate you will leave behind and avoid conflicts between your heirs. Add to that a living will that leaves instructions on how to deal with your life and death medical condition when you are not able to decide for yourself (i.e., like when you are in a coma).

As sure as I’m standing here – Get adequate life insurance coverage with the health insurance riders appropriate for you. Unlike with investments, you do not make a bet with life insurance. It is the life insurance company that makes a bet that you will live a long and healthy life while standing ready to financially protect your loved ones should you be called from this life early. And since death is unavoidable, you will be getting coverage on a sure thing. You’ll never have to be afraid as the life insurance company will try to help your family find their way.

Enjoy your sherbet with these sure bets. Just remember not to overdo it as overpreparing, like with eating too much sherbet, may also be bad for your (financial) health.

Efren Ll. Cruz is a registered financial planner of RFP Philippines, seasoned investment adviser, author of personal finance books in the Philippines. Join our FREE webinar on risk management on April 17, 2020. For details, email [email protected]. To learn more about personal financial planning, attend the 82nd RFP program this May 2020. To inquire, email [email protected] or text at 0917-9689774.