Life is what happens when you’re making other plans, as John Lennon would say. Most of your lifestyle, quality of life and the events that define your life are up to you – your health, when you get married, your stress levels and so on. But sometimes things come along that you could not have foreseen or controlled – unexpected pregnancy, civil unrest, a sudden illness, an accident.

Often, these unforeseen events are expensive. We believe that these events, whether good or bad, do not have to derail your dreams by unexpectedly taxing your finances. WellsFaber believes that putting in place thoughtful and personalised plans to mitigate the financial risk when these things happen is an important part of sound financial planning.

We call it risk planning.

Here are four areas where proper risk planning can protect your financial plan:

1 – Protect your dreams and their timelines

When people have dreams, they usually have timelines for those dreams. Many want to be married by 35 years old, or retire before 70 years old. Some dreams are, by nature, time-bound; like wanting to have children. Unforeseen events can unfortunately mean postponing or even cancelling the fulfilment of dreams because there’s just not enough money.

For example, the benefits of saving diligently for retirement from an early age can be wiped out if you’re in an accident and are unable to work, but didn’t have any plans in place to replace your income. You may therefore end up having to use your retirement savings to cover every day living costs. Sound risk planning can help prevent this and keep your dreams and their timelines on track.

2 – Protect your business

A young business can be as fragile in its development as a newborn baby, and as precious to you. Risk planning ensures it gets its best chance whatever befalls you or surrounding circumstances, like a significant loss of profit or personal surety if something should happen to you that would ordinarily affect the business’ normal operations.

3 – Protect your loved ones

Just like your business, and even more important, risk planning can ensure that your family has their best chance at a good life if you were to become disabled, pass away, be unable to work or any other misfortune that means you’re suddenly not able to take care of them. This not only gives you peace of mind, but also your spouse and children or any other dependents. And although it’s no substitute for misfortune never having happened, it’s at least a comfort to know that the trauma of the death of a loved one, for example, is not followed by another trauma when your family must face dire economic straits.

4 – Protect your peace of mind

This last one is perhaps the most important. The events that risk planning seeks to address are by definition unknowable and can’t be controlled, like sudden misfortune. If catastrophe strikes on this day next year, then risk planning saves you from worrying fruitlessly for the 364 days before and gives you peace of mind, as well as the tools to deal with whatever comes your way.

Risk planning conversations and products inside of your financial plan and portfolio are crucial elements to equip you to thrive.