Raindrops keep falling on my head…
We can't prevent life's storms from raining on us; they are an unavoidable fact of life. The only certainty we have in life is, ironically, uncertainty. We wake up each morning not knowing what may happen to us but one thing is for sure- life is not pleasant breezes and smooth sailing all the way. During the journey, dark clouds may appear and lightning may strike. And these surprises almost always cost money.

Financial planning is defined as "The process of allocating your assets and apportioning your income to ensure that in all circumstances, there are financial resources to meet financial obligations". Therefore, financial planning is not just planning for the future or your retirement days; it also involves planning for financial needs resulting from various uncertainties such as death, disease and catastrophes.

Will
Have you written a will so that your wealth will be distributed according to your wishes? If you have a will, when was the last time you reviewed it? Does it make any provisions for a tragedy, where you and your spouse pass away at the same time (such as in a car accident)? If you have children or other dependents, does your will provide for their special needs, such as appointing a guardian or trustee?

Hospitalisation
In the event that you are hospitalised, what are your financial planning precautions? It's highly important that you review your hospitalization and surgical insurance scheme. You might want to consult your insurance agent on your scheme's benefits. If you are covered under your employer's insurance scheme, you might want to check with your human resource department on the type of benefits you are entitled to.

If you do not have any form of coverage at all, you might want to consider getting one. Without transferring the risks to an insurance company, you may have to deplete your hard earned savings or fall into debt in trying to settle your hospital bills.

Living expenses
In times of illness or unavoidable accidents, you may be quarantined in the hospital or stuck recuperating at home. Unless your employer is very kind, this could mean zero income for you. Thus, your emergency reserves play an important role in keeping you afloat.

Emergency reserves are especially critical for those who work in dangerous occupations such as in construction. Something like the SARS outbreak may also affects those who work in the tourism, airline and retail industries, as the risks of losing your employment and income are high.

How much emergency reserve do you have? How long will it last you? The rule of thumb is: you should have an amount that can cover your living expenses for six months. For those who are running businesses, it should be 12 months' expenses. Of course, this amount depends on your situation and comfort zone.

Wondering where do you save your emergency reserves? When you are in need of emergency money, you want to be able to access it quickly and conveniently. You don't want to have to sell, at a loss, an investment that happens to be in a down cycle nor do you want to withdraw your investment funds with early withdrawal penalties.

The most cost efficient vehicle for your emergency reserves is a fixed deposit account. You could also cash in the value of your life insurance policies. Another option is to use overdraft facilities. Having said that, don't forget the importance of having a portion of your reserves in a bank account that you can have ready access to.

So what now?
Conclusion is: Don't wait until it pours to realize that you don't have an umbrella. If you have not taken any financial planning precautions, start now. With proper financial planning habits, you can enjoy the peace of mind that comes with knowing that you have sufficient funds when unwanted surprises arrive. Proper financial planning practice won't necessarily keep the storms from coming, but it will definitely keep it from washing you away.