Planning for risk is not pessimistic

Life throws curveballs. Not preparing for them is a mistake. You could lose your job tomorrow. Have your car totaled on your way home from work today. I'm not being morbid, I'm being realistic. Planning for risk isn't pessimistic. It's the smart thing to do. Is it uncomfortable to think about? Of course, but when has that ever stopped me?

You need to start by admitting and identifying the risks we all face. Death, disability, job loss, extended illness - these are possible for anyone. But there may be others you can add based on your own knowledge of your life, perhaps it's a specific illness that runs in your family. But just naming the risks isn't enough. You need to also assess how each risk impacts your family and your finances, how prepared you are for each one, and what the urgency is for dealing with each risk.

Here's the challenge: fill in this chart by assigning each box with a "1", "2", or "3".

1 = Highly prepared, high impact, high urgency

2 = Mildly prepared, mild impact or urgency

3 = Not prepared, low impact or urgency

If this worksheet stumps you, that's a problem. Any one of these risks can completely derail your financial life. If the 'Preparation' column is predominantly filled with "3"s, then you need to add risk preparation as an urgent financial goal. Whether it's buying life insurance, adjusting your car insurance coverage, or creating a career back up plan, you need to take these risks seriously.

Oh, and uh, happy Thursday!