An important advantage that a formal financial planning exercise brings to the table is to tie together all the elements, big and small, that go into ensuring financial well-being. In an ad-hoc or do-it-yourself exercise, the focus tends to be on the larger and more visible elements, such as life insurance, long-term goals, investments and mortgage. However, the finer details that may get left out could spell the difference between success and failure in securing one’s financial future.
Here are a few examples of smaller details that may get overlooked.
Health insurance is overlooked
Talk about insurance and most people will claim that they are covered. More often than not, this refers to the life insurance cover that the household has. But the risk to income is not only from the death of the primary earning member. Large expenses that have not been budgeted and provided for can equally put the household’s financial situation at risk. Among such expenses, the largest risk is from health related issues. Expenses related to health, typically, cannot be postponed indefinitely or even planned in advance. A large expense will be a strain on the budget and can even push the household into debt.
