Recently, in our neighbourhood we witnessed a spectacular house 
fire where the home was completely destroyed.  An obvious tragedy 
to the owner, yet a powerful reminder to be grateful for all we 
have – including our ability to plan ahead.

Usually these fire stories are reported along with appeals for 
donations for the unfortunate family who lost everything they 
owned.  Everyone says "how sad" and pitch in with whatever they 
can.  In this tragedy however, it was reported that the homeowner 
"luckily had insurance." 

Luckily???  Maybe thoughtfully?  Or thankfully?  But certainly 
not luckily??   Perhaps simply a poor choice of words, but then 
again, often what we say is how we think.  Is it luck that 
someone lands a high paying job in his or her field of work?  Is 
it luck that someone is able to retire in their early 50"s?  Or 
live in a big home, drive nice cars and enjoy all the luxuries of 
a financially successful life?  Unfortunately, we often hear 
people discussing financial success as lucky.  Perhaps this is 
why many people are still "hoping" they will win the lottery to 
support them in their retirement.  Same with the stock market: 
many people "play" the stock market because they think they are 
going to "get lucky".  They forget that what they are doing is 
making business decisions about companies to invest their money 
into.

There was no luck involved for this homeowner!  They deliberately 
contacted an insurance provider and took precautions to protect 
their risk.  This was part of their financial planning!  If you 
are "hoping" you're going to "get lucky" you aren't taking 
control.  Financial planning is about being in control.

There are many financial risks and any one of them could 
completely wipe you out financially and perhaps emotionally too. 
So, one of the first steps to establishing a solid financial plan 
is to understand your risks and to take precautions to minimize 
them.  There is no luck involved in preparing in case a tragedy 
occurs.  If you aren't aware of where your risks are, or haven't 
evaluated them recently, a review with a qualified financial 
advisor and reputable firm is in order.  If a fire isn't enough 
of a wake-up call to everyone of the magnitude and impact of 
financial risk, consider all the potential areas of exposure: 
death, sickness, loss of income, loss of money, old age, 
unexpected accidents or repairs, and on and on.

Obviously some areas can be covered by insurance:  home, auto, 
disability, life, medical, critical illness, long term care, 
credit, business overhead, etc.  But consider some of these in 
your evaluations: 

 * Source of income:  Is there more than one?  How much are 
   you in control of its continuity?  Haven't we all seen 
   families almost devastated by a downsizing?

 * Investment protection:  Do you have a loss protection plan 
   or are you "hoping" for a recovery and planning on only 
   positive returns?  Why do you have the investments you have?  
   Do you know someone who hung on to a "sure" investment only 
   to find the money almost completely disappears?

 * Your retirement:  How many sources of income are you 
   planning to receive?  Are you planning to retire at a 
   particular age or at a particular financial landmark?  
   Retirement means you are financially independent so you 
   can chose to leave the workforce.  Is that your plan?


Financial planning is not about luck!!!  You must thoughtfully 
plan where you want to be and carefully put the pieces together 
to get you there – including protecting yourself against 
potential risks!! 
 

Tracy Piercy, a Certified Financial Planner, offers proven 
practical success principles, tools, ideas and strategies 
integrated with practical financial planning strategies. She 
has worked in the financial industry, in insurance, banking, 
and as a well respected investment advisor with CIBC Wood Gundy, 
for more than 15 years. Tracy is the author of Enlightened 
Wealth, a personal money journal http://www.moneyminding.com. 
You can reach Tracy at tracy@moneyminding.com