3 Affordable Financial Safeguards to Protect Your Health and Income

Jennifer recently asked, “How can I prepare our family for the high cost of health insurance when my husband leaves his job at the end of the year to become a full-time independent contractor?”

And Megan left a voicemail saying, “My jobs are all pretty physical, and I’m concerned that if I get injured, I won’t have enough insurance to cover my everyday expenses. I’ve heard you talk about disability insurance and would like more information on how to get it. What’s the best way to shop for and purchase disability insurance?”

Thanks for these crucial questions, Jordan and Megan! If you, or the breadwinner in your family, lose your job or business income, or you get sick all of a sudden, what would you do? For many people who don’t have financial protections in place, these scenarios are their worst nightmares.

Statistics about getting ill or suffering a serious injury during your career are pretty sobering. According to the Council for Disability Awareness, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age.

According to the Council for Disability Awareness, more than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age.

And when a disability occurs, the average time spent away from work is close to two years. Yet, most people don’t have a back-up plan for how they would pay everyday bills, such as housing, utilities, and food. Many Americans don’t even have health insurance to pay a portion of their medical bills.

While you might think that protecting your health and income is a luxury, it isn’t. These safeguards should be pillars of your financial plan. Let's have a look at three financial protections that can be surprisingly affordable for both employees and entrepreneurs.

1. Savings

If you follow the Money Girl blog or podcast, you’ve heard me talk about building a cash reserve, which is known as an emergency fund. Having savings is one of the best ways to protect yourself from unexpected expenses or a sudden drop in earnings.

The trick is to save diligently when times are good. If you get a raise at work or have a profitable year in your business, it can be awfully tempting to spend the excess. But before you buy a luxury item or book a vacation, make sure you have plenty in the bank. I know saving isn’t as much fun. But the best way to make sure you’re ready when bad luck strikes, is to prepare for it today.

Before you buy a luxury item or book a vacation, make sure...

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