By Teneshia “Miss Money Sense” LaFaye
If you are diagnosed with a major illness that requires aggressive treatment or you get into a bad car accident and can’t work for six months to a year, will you be able to continue your current lifestyle?
Will your current income keep coming in? Will your savings be enough to cover your living expenses?
If you lose your job, will you be okay while you search for a position with comparable income, even if it takes a year or two?
If you answered “yes” to those questions, you are on the right financial track. Keep doing what you’re doing.
However, if all of your money is tied into one income source, I recommend creating a backup income stream so all your eggs won’t be in one basket.
If you answered “no” to those questions, you are like many Americans who are one catastrophic event away from financial ruin, which can result in losing the roof over your head.
I recommend that you develop a savings strategy to stash part of every paycheck and at least half of every tax return until you have 6 months to a year of living expenses.
But that’s just enough to keep your head above water when something major and unexpected happens. In order to stay at your current living level, you need 1-2 backup income sources, that will continue to bring you money no matter if you’re sick, attending to a sick relative or traveling abroad.
Wealthy people have 6-7 income streams. So you have to catch up or be left behind. Remember, only 1% of American workers will retire rich and 4% will be well off. The other 95% will be dead or broke by age 65. That’s real talk.
I would love to show anyone who is willing to let me steer you on the right course like my oldest son, who is 21 years old and balling, saving and investing out of control. Personally, I have several income sources that allow me to continue my current lifestyle, no matter what. I can take off the rest of the year, and still be able to pay all of my bills and travel.
So again, if your life will be shaken up because your current income will stop or your savings will run out with a major event, start thinking of and creating a backup income plan and definitely, a retirement plan. If you need help, reach out to me for guidance.
Teneshia LaFaye is a former award-winning newspaper journalist and a nationally certified financial education instructor. She owns a health insurance agency and has written two books, What My Mom Taught Me About Money and Mom’s Money Lessons, available on her site, www.mytensense.com. Get her FREE daily money tips to work on improving your financial mindset by “liking” her MissMoneySense page on Facebook.