Financial Contingency Planning: A Necessity, Not an Option

Welcome back to another day in my journey - consecutive day 1563 in my ultramarathon attempt, running and vlogging the distance of a lap around the world, barefoot. Today, I'd like to discuss a topic close to my heart that everyone should prioritize: financial contingency planning.

You see, financial stability isn't just about how much you earn or save; it's about being prepared for the unexpected. My insights on this matter stem from a personal discussion I had with a colleague who, despite being just as capable as me, found himself in financial trouble simply due to the lack of a proper money system. This encounter highlighted the stark difference between financial planning and winging it, and why the former always triumphs.

The Foundation: Why Have a Financial Contingency Plan?

Imagine relying on one or two income streams, and then suddenly they vanish. Without a proper plan, you're left scrambling to find alternatives, adding layers of stress and anxiety to an already precarious situation. As I mentioned to my colleague, I have multiple income streams. Even if one or two dry up, I have four to fall back on, ensuring my lifestyle remains stable during tough times. It's about creating a safety net before you need it.

The Simple Steps to Start Your Financial Contingency Plan

Here's my step-by-step approach to financial contingency planning:

1. List Your Income Streams First, jot down all your income sources and the amount they bring in each month. This includes everything from your day job to investments and interest from bank accounts.

2. Calculate Current Expenditure Next, document your current expenses, including fixed costs like bills, variable costs such as groceries and discretionary spending like nights out and holidays.

3. Determine Net Cash Flow Subtract your total expenses from your total income to find your net cash flow. If you’re in surplus, great! If you're in deficit, that's a clear signal to make adjustments.

4. Identify Potential Risks Identify which income streams are at risk and simulate the impact of losing them. Does it lead to a significant deficit? If so, that's your cue to prepare further.

5. Develop Alternative Revenue Streams, think ahead. How can you replace a lost income stream? Brainstorm potential alternative revenue sources and consider how realistic they are. This might mean considering a side business or finding a part-time job.

6. Build Cash Reserves Ideally, aim to have six months' worth of lifestyle costs in liquid reserves—savings you can quickly access. This cushion can be your lifeline during tough times.

Regular Review Is Key

Planning doesn’t end once you have a strategy in place. Revisit your financial plan every quarter, especially when reassessing your goals and ambitions. Tweak it as necessary; an income stream you once deemed reliable might no longer be viable.

The Psychological Benefits

Having a contingency plan can drastically reduce stress and anxiety. Knowing that you have a fallback plan allows you to focus on your current goals without the constant worry of "what if." Trust me, I've been in positions where financial instability was a significant stressor, and I wouldn't wish that on anyone.

Final Thoughts

Financial contingency planning isn't just an exercise; it's a necessity. The peace of mind it brings is invaluable. So take that first step today. Write down those numbers, consider those risks, and imagine the alternatives. Your future self will thank you.

Thank you for following along on my journey. If you believe in my mission of saving children's lives through this ultramarathon challenge, please subscribe, share, like, and comment on my content. More visibility means more funds raised, and more lives saved.

Stay positive, stay happy, and I'll see you again tomorrow.

Kevin Brittain