It’s been a year few will forget. Icons fell from grace, Mother Nature unleashed her fury with hurricanes, floods and wildfires. Political drama.
Much as you want to kiss this year goodbye, also reflect. What money lessons should you walk away with?
- Disaster preparation
“The recent devastation wrought by Hurricane Harvey highlighted the need for flood coverage, even for locations that aren’t designated flood zones and are not at high risk for flooding,” says Joseph Deutsch, founder of the Fidella Agency, a real estate insurance firm in Lakewood, New Jersey.
Many people believe that the government covers damages due to flooding. However, federal assistance is only available if the flooding is formally declared a disaster. And often this assistance comes in the form of loans with interest rates, which can take years to repay, especially if the home still carries a mortgage.
“Such loans can be costly and can cause real damage to your financial future,” says Deutsch. In contrast, “Flood insurance claims are paid out even if no disaster is formally declared and is not a loan that has to be repaid.”
- Cash is king
Having an emergency fund is essential to prepare for the unexpected, points out Leslie Tayne, a Melville attorney, specializing in financial issues. Work on building at least six months of living expenses. But having even $1000, $500 or $200 can help in an emergency.
- Keep politics in perspective
“Political feelings and beliefs should have little to do with how we invest and plan for the future. Despite significant disapproval of the party in power, markets continued to rise as the economy grew quickly,” says Russell Rivera, president of Voice Wealth Management in Manhattan.
A different lesson is that a change in tax policy can have a significant impact on your financial plans, both short and long term. “Make sure that your financial plan is ready and able to withstand issues both foreseen and unforeseen,” Rivera says.