As originally appeared in The Jerusalem Post on June 29, 2017.
Here’s something to think about: How come you never see a headline like ‘Psychic Wins Lottery’? Jay Leno
We all do it. We hear on the radio that someone just won $500 million in the Powerball lottery. Or we read about someone inheriting a large sum of money or finding oil in their back yard. We end up fantasizing and playing the “what if” game. What would happen if I came into a sudden windfall of money? Each of us has our own answer to this question. We would quit our job, give charity, take the family on a vacation, buy apartments for our children, and live the good life?
Instead of only dreaming about striking it rich, it would be a much better exercise to play the “what if disaster strikes” game. What if the washing machine breaks down? What if I need to invest a lot of money to fix the car? What if something happens to my spouse? While we don’t like to think about these things, the fact is that it’s statistically much more probable that one of these events will happen than coming into a large sum of money. The question is, are you prepared? While it’s much less fun to play this game, it’s an exercise that’s of vital importance for your financial future. I am speaking about reality. In the last month, I know 3 people who had strokes, two who had heart attacks and a young mother who was diagnosed with cancer.
Rosh Hashana is not so far away. Not to scare anyone but it is really just around the corner. According to Jewish tradition, Rosh Hashana is when the Almighty inscribes for us our financial resources for the year. But since we don’t know what that magical number is, we have a responsibility to spend our money wisely. The Biyur Halacha comments at the beginning of the last section of the laws of holidays, on the importance of living within your budget. The context of this Biyur Halacha, is that our financial situation is inscribed on Rosh Hashana except for our spending for the Sabbath and holidays. He goes on to say that it is praiseworthy for each who is strong and doesn’t give into temptation to buy things that you can’t afford.
Do you have an emergency fund to pay for the broken washing machine or the sudden car expense? Do you have adequate insurance if something happens to your spouse?
The famous motto of the Boy Scouts is, “be prepared.” It’s much more effective to fix a leaky roof in the sunny summer than it is to wait to fix the roof once it starts raining. With some planning, you can make sure that you are prepared if disaster strikes. Make sure that you have an emergency cash fund, to help pay for sudden expenses, that may spring up. Make sure that your insurance policies are up to date. For those who don’t have insurance, especially life insurance, get some. I can’t stress enough, especially to young couples with small children, how important it is to get life insurance. How often do we get approached to donate money to a family where a parent tragically passed away, and the family is in terrible financial duress. Insurance can help prevent this situation
The next time you hear about someone who struck it rich, and start daydreaming about what you would do if it happens to you, snap out of it and get back to reality. Start thinking about those other headlines; layoffs, unemployment, sickness and more and do some thinking to determine how you would react.
This kind of future planning will prevent your dreams from turning into nightmares.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is the author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email firstname.lastname@example.org.