123 | Preparing for the Unexpected

If you’re not financially preparing for unexpected things that can come up, this episode is for you.

Not preparing yourself ahead of time will lead to unnecessary stress in your life when an unexpected expense arises.

Although we don’t know exactly when unexpected things will happen, we typically know that they can happen and can prepare for them.

In this episode, let’s talk about the mindset you can adopt to prepare for unexpected expenses and how to raise the bar on the types of unexpected things that will have a significant financial impact on you.

• the way many people think about life and unexpected things
• two beliefs that lead people to prepare for the unexpected
• how my clients handle unexpected situations
• my own experience with an unexpected change in circumstances
• examples of ways to prepare for the unexpected
• raising the bar on things that will have a significant financial impact on you

Episode 121: Preparing for the Expected

If you’re ready to learn the mindset and strategies to master your money, let’s schedule a call.

You’re listening to Wealthyesque. We are a community of lawyers who believe that true wealth is having control of our time. I’m Rho Thomas, and as a busy wife, mom and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today we are talking about preparing for the unexpected. We talked a couple of weeks ago in Episode 121, about preparing for expected expenses that we know are coming up, and how so often we will know that we have something coming up, but we don’t prepare for it. financially and then end up feeling caught off guard when it inevitably comes up. I think the same thing happens with unexpected expenses. Although these things are unexpected and that you don’t necessarily know that they’re going to happen or when they’re going to happen. You often know that they can happen. For example, a car accident health issue, a job loss, a car home repair, you might not expect those things when they happen, right. It’s not something that you know exactly when it’s gonna happen. We don’t know it’s gonna happen on Tuesday at three o’clock. But it’s also not something that’s completely unexpected, right? We know that those kinds of things can happen the issue though, is many of us go through life as if we expect things to always be the way they are. And we don’t prepare for things that may go wrong or things that may change. But the same mindset we talked about with preparing for expected expenses applies in the case of unexpected expenses to people who prepare for the unexpected believe that they have control of their finances if you believe that your money is just happening to you, if you believe that these things just happened to you’re powerless to do anything about it, then of course you’re not going to prepare for unexpected expenses. something pops up and you’re going to think great, here we go again, right and you’re gonna wonder how you’re gonna pay for it. And there will be that underlying money stress on top of the stress of whatever the situation is that popped up. But when you know that your money is not just happening to you and you know that you have that control, you will make choices with your money and do certain things to set yourself up to be in the best place to handle unexpected expenses. The unexpected expenses even though they might catch you off guard and that you’re not expecting them. They are not going to have as much of a financial impact. Another thing is that people who prepare for the unexpected know that life is full of ups and downs. As we talked about earlier, many of us live as if times will always be good and things will always be going our way. But that’s not the case. Life is cyclical and there are ups and downs. When things are up sure you want to enjoy it but also make sure to prepare for when things are now. I work with my clients for six months at a time and a lot of life can happen in that six months. So my clients have had major car repairs, tax bills that were much higher than anticipated. parent who passed an ICU stay, right. These are just the ones that come to mind off top my head. I’m sure that there were others as well. But in each of these instances, my clients were prepared. They didn’t know that these specific things were going to happen, but their finances were in such a place that they were able to cover those expenses with little impact to their finances. Before they learned how to manage their money, these likely would have been financial crises. But now they know exactly what they’re doing with managing their money and so it was just a matter of pulling money out of their savings account. Or not spending as much in a particular category or not making as much progress toward a goal in that particular month as they may have wanted to to be able to cover the unexpected expense. I remember in the case of my client who had a parent pass, it was actually her husband parent, but they weren’t able to handle the funeral arrangements and travel to be with his mom and cover her living expenses. So she didn’t have to worry about anything and she was grieving the loss of her husband and my client was telling me about what a blessing it was to be able to handle all of that and not have to worry about her family’s finances in the midst of it all and it not be a strain on them. At all. My own story is another slightly different example. So if you’re unfamiliar with my story back in 2016, my husband and I had just had our first child and we were looking at our finances to see if we could take advantage of this part time policy that the firm I was working with offered. That is when we realized that we had over $670,000 of debt, most of which were student loans. So we decided that we weren’t in place to take advantage of that policy to take a pay cut right? But that situation set us on this whole journey of improving our finances and paying off our debt and building our savings and investments. So then fast forward to 2021 I ended up dropping down to 50% at my farm during the pandemic and ultimately I left the farm altogether to focus on my business and when my husband and I were having that conversation about me leaving, he was like this is what we’ve been preparing for. And I was like, wow, we didn’t know back in 2016 that there was gonna be a pandemic and that we were going to have two young kids and I was going to be trying to balance practicing law with caring for my kids and I was gonna have this business that I felt really passionate about and knew I could help people. But we were preparing our finances for if something changed in our lives and we were preparing to be able to make decisions without money being the major consideration. And so although the exact circumstances were unexpected, right, you seriously could not have told me back then that I will be doing what I’m doing now, because I was that first year who just knew I was gonna be a partner. But although the exact circumstances were unexpected, we knew that there could come a point where the situation we were in back in 2016 with the exact jobs we had and the amount we were making and all that we knew that could change in the future, whether it was voluntary changes or not, like I think for example, about the furloughs and layoffs the people experiencing the pandemic. And so we made moves to improve our finances and set ourselves up to be able to handle those changes. And if we didn’t have the mindset of being in control of our finances, which we didn’t for the first few years before our son was born, let’s be honest, but like if we hadn’t developed that mindset that we are in control of our finances, and we can direct our money and prepare for the downtime in life, then it would have been a lot harder to make the decision to leave the firm and go all in on my business years later. Believing that you have control of your money and can prepare for things that come up will lead you to actually controlling your money. And preparing for things that could come up. Just like with the expected expenses preparing in advance for the holidays or for vacation or whatever else you know is coming up. You can do the same thing for unexpected expenses. You can build your emergency fund so you have a cushion and should things go sideways and you don’t have your income coming in. Or you don’t have as much income coming in. You’re gonna be paying off debt, which decreases your expenses each month. You can make sure you have adequate insurance in place. So if you have people who are depending on your income, do you have life insurance? Do you have enough insurance on your car, homeowners or renters insurance, disability insurance, umbrella insurance, which provides coverage beyond the limits of those other types of insurance? And I’m not necessarily saying that you need all these kinds of insurance, but you can consult with an insurance professional to determine if you do right making sure you have an estate plan in place. You want to be making decisions now that set you up to better handle those unexpected things that could come up in the future. And look, I recognize that even with the best preparations there may be a significant event such as a cancer diagnosis or severe accident or something like that. That goes beyond your preparations. But when you do prepare the bar for the types of things that will have a significant financial impact on you is so much higher and more and more things become just an inconvenience rather than leading to financial ruin. So let this be the word you need to hear to prepare for the unexpected things that will inevitably come up in your life. And if you would like help with getting control of your finances and preparing financially for the different things that like in throw at you, we should work together so head to rho thomas.com/call to get started. All right. That is it for this week’s episode. Come connect with me on social media. I’m most often on LinkedIn rho Thomas and Instagram, I am rho Thomas. Subscribe to the show and leave a review which helps to get the show in front of more people. And please think of a friend or two who could use this information and share this episode with them. As we close out friend I pray that you take the information you learn here, apply it in your life and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to regain control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.