We encounter numerous risks in our daily lives. While many of these risks can be managed within our known boundaries, there are certainly risks we fail to notice. Today, let’s explore these overlooked risks and think about how we can better manage them.
Health and Finance: Preparing for Unexpected Risks
Many people exercise, maintain healthy eating habits, and undergo regular check-ups to stay healthy. Writer Jonathan Clements followed a similar routine, working out every morning and managing his diet. However, he was unexpectedly diagnosed with cancer. This situation shows that no matter how prepared we are, unexpected risks can arise.
Similarly, in financial management, we often focus on specific risks. We set aside emergency funds and purchase insurance to cover risks like stock market crashes, car accidents, house fires, or job loss. But despite all these precautions, other risks can still emerge, meaning that unexpected financial threats can cause significant damage.
Unforeseen Risks: What We Overlook
There are various risks that we fail to notice. The 2020 pandemic is a prime example. This completely unexpected event threw many people’s daily lives and financial situations into disarray. Similarly, the 2008 financial crisis, the 9/11 terrorist attacks, and the 1998 collapse of the hedge fund Long-Term Capital Management also had unexpected and significant impacts.
Additionally, financial risks related to family are often overlooked. For instance, financial difficulties of adult children, divorce, or long-term care for elderly parents are examples. These unforeseen situations can surprise us and greatly increase our financial burden.
Strategies for Risk Management: Building Financial Resilience
While we may not be able to avoid these risks entirely, we can prepare by building financial resilience. Jonathan Clements suggests three basic principles:
- Diligently save money
- Carefully manage investments and expenses
- Manage risks
By following these three principles, we can better cope with unexpected risks. However, none of these efforts provide a perfect guarantee, and even the most prepared individuals can sometimes face unforeseen challenges.
Conclusion: Our Approach to Preparing for the Future
There will always be unexpected risks lurking in our lives. Instead of fixating on these risks, it’s important to focus on building financial resilience and preparing for the future. By constructing a financially sound life, we can better respond to the uncertainties of the future.
I encourage you, the reader, to reconsider the risks you may be overlooking starting today. Whether they pertain to health, finances, or other areas, thorough preparation is essential.
Reference: Humble Dollar, “The Risks We Miss”