Major life events are inevitable: We move to new cities. We get new jobs and promotions. Some of us expand our families and see children off to college. We exit the workforce.
Most of these shifts are refreshing, necessary, and—most importantly—planned. But sometimes change can catch us off guard or be downright disruptive. Market downturns. Personal injury. Divorce. What can we do when the unplanned arises? And how do we navigate these changes while ensuring our financial plan remains intact?
Preparation is key, but there are other considerations. Let’s look at what you should—and shouldn’t—do when faced with life’s most challenging moments.
Be calm, lean on your purpose
Where matters of money are concerned, emotions can run high. Especially when you’ve diligently earned, saved, and invested your way to a sizable estate. The stress of unexpected situations might cause panic—and force hasty decisions.
Craig Cascio, Truist’s head of wealth planning, says reacting too quickly to those situations may compound the problem. Instead, he recommends taking a pause, organizing your thoughts, and relying on your purpose.
“Purpose doesn’t change when unexpected events occur,” Cascio says. “Your goals may shift, or the paths you take to get to them, but your purpose serves as your North Star.”
Keep asking yourself: What is it I’ve been building my wealth for? How do I want to be remembered by my family and community? The “why” behind your wealth goals may help you manage the unforeseen so that you can make confident decisions about your financial plan if necessary.
Be open with your advisor and your family
Cascio suggests speaking with trusted financial professionals as a next step. If you have an established relationship with a team of advisors, your team should have intimate knowledge of your financial and estate plans, and if you’ve talked to advisors about your values and purpose, they’ll have guideposts to keep you going in the right direction—not to mention the financial and legal expertise to help support your goals and aspirations.
It’s also important that you’re clear about your specific situation so that your advisors can help you understand its full impact. Once advisors understand the full scope of the issue, they can help you distinguish between short-term problems that might not require change and long-term ones that might require portfolio adjustments.
You should also discuss potential effects on your estate with family so that they’re aware of your financial plan as it evolves. Doing so may also provide your family members with a model of how to respond to a similar situation. Including family in the conversation also reinforces your shared purpose and helps build cohesion.
Be prepared, focus on what you can control
When you live your purpose, there’s more than just the financial side of your personal wealth at risk. Your ability to make the impact you want is also in jeopardy. Cascio says your purpose is even more reason to protect your—and your family’s—financial future.
“Understanding where you are in your financial journey and where you want to go is important,” he adds. “The unexpected can take you away from that, but there are things you can do to be better prepared.”
He says creating a savings cushion or having access to a credit line can help you in the short term so that you don’t make unnecessary changes to your financial plan. “If you have sudden expenses or lose a job, an emergency fund becomes critical,” he says.
He also recommends carrying the appropriate insurance coverage. Whether it’s life, disability, long-term care, or property and casualty, insurance can help mitigate a lot of risk.
Up-to-date estate planning documents are also essential but often overlooked. Cascio says unexpected events such as the premature death of a family member—or of the client—can leave estates in disarray.
“You don’t want to be in a situation where that happens and the documents are not in order,” he says. “Because then you’re leaving it up to state statutes to determine the disposition of your wealth and they may not be in alignment with what the deceased actually wanted.”
No one can predict what will happen in the future, and life rarely goes according to plan. About the only thing you can expect is that one day you’ll have to navigate the unexpected. Having a plan is important. It may not be the same one you started out with, but you can at least take comfort that the most important aspect of your plan—to live out your purpose—is intact.
Read more about managing risk in your portfolio in “The impact of purpose.”
Talk to a Truist Wealth advisor.