‘PROTECT’ your assets and income to minimise pain and loss

When I was a young bloke, just starting to drive, my Dad would always say to me “Nobody gets up in the morning planning to have an accident. Be careful!”

The Oxford dictionary defines an accident as ‘An unfortunate incident that happens unexpectedly and unintentionally, typically resulting in damage or injury’. Intentional human actions, mistakes and nature (natural disasters and illness) can all cause damage, injury/death, loss and pain. I have chosen to combine these and call them ‘incidents’. To add some context I want to share 3 separate incidents that happened in my world, just in the last 24 hours:

1. Yesterday morning, I was riding my bike with two mates along the Great Ocean Road, near Lorne and a guy took out my mate (just missed me) with his caravan and nearly hit a car driver coming in the other direction. He was too impatient to wait for a safe passing spot. There has been a lot of talk about cyclists and cars recently, but I can assure you, we were riding as far left as we could and in single file. Luckily a few stitches, some bruising and a damaged bike were the worst of it. My mate has 2 dependents; boys 9 and 5. He has his own business and was supposed to be at work today, but won’t be able to work for weeks.
2. A young man (close family friend) was king hit on the way home from the pub on Sunday night, trying to help some tourists, who were being harassed by an aggressive local. He had his hands in his pockets and was knocked out briefly. Luckily he landed on his elbow, not his head. We have all heard too many recent stories about people dying from hitting the pavement after a king hit. He has no dependents but needs to work to earn income.
3. The guy next to my mate in hospital yesterday had 21 stitches in his head. Apparently he was on a run, saw a big kangaroo, panicked and turned to run away. He ran straight into a tree!

My point is that 3 separate incidents, within 24 hours and only in my immediate world, could have ended in far more serious injury and/or death, causing financial and emotional loss and pain. We all hear about these types of incidents. What often happens though is that people rationalise and say things like:

• “Oh, they were bike riding on the road and that’s dangerous!”
• “That guy shouldn’t have stayed out late and been walking home after drinking.”
• “It won’t happen to me.”

What about the guy with the kangaroo and tree? Rationalise that incident…

Incidents happen every day. They often seem avoidable in hindsight, but the fact is that they still happen.

‘PROTECT’ is the first stage of the PAIR Business Value model. Protecting your assets, income and dependents against future harm or loss is equally important in life and business. For those of you without a ‘business’ I suggest you think of your life as your business, because in both, there are assets and income. It is not possible to go into every option to ‘PROTECT’ and all the associated details in this blog as there are so many.

My goals from this blog are therefore to help you:

1. Understand some of the most impactful ways you can ‘PROTECT’
2. Accept WHY it is so critical if you want to feel more settled and have more control in your life and business
3. To TAKE ACTION (this is the most important part of the process)

A current Will – WHY?

• I will take a well educated guess and predict that more than 50% of the people who read this blog don’t have a current will
• Death is one of those things many people think will happen when they are old and won’t happen by accident or illness – unfortunately the reality is very different
• Without a current Will the people you care about the most will have to deal with financial stress and pain as well as emotional pain and loss
• If you have children: what if you and your partner/husband/wife die together? Will the kids be raised by the people you choose? Will they be able to continue the education and lifestyle you chose for them?

Income protection insurances – WHY?

• If you are injured or have an illness that prevents you from going to work, there are insurances that can pay you up to 75% of your normal income until you can go back to work. I am sure that you have people and financial commitments that are dependent on your income. What is your plan if you can’t go to work? If you have insurance, is it sufficient?
• Businesses  can take out  KEYMAN insurance for the owner and key staff to protect the business from the costs and loss that occurs if one of those people die or are permanently disabled and not able to return to work. Think of the time it would take to find and train a new person to be able to replace the value of a lost key person.

Appropriate written contracts – WHY?

• The process of writing and signing a contract of any description forces all parties to make sure they are in agreement, or helps them realise they cannot come to an agreement. People will all too often make verbal agreements and hope that nothing ever goes wrong. PUT YOUR AGREEMENTS IN WRITING!
• Contracts are rarely looked at after they are signed but always come out when fear and/or greed are involved. If you sign a contract without emotion then it will be easier to achieve what you expected when a situation arises
• If something happens to you then a contract can be used to ensure your chosen power of attorney/replacement can protect your interests.

Cash flow buffer – WHY?

• Most private businesses are under capitalised so cash flow is critical.
• You will rarely get paid on time by your customers and most of your fixed costs won’t wait (such as wages, rent and tax).
• Sales rarely happen when you want and/or expect them.
• It usually takes longer and costs more than planned to grow your business. A buffer assists with unforeseen costs and delays.
• Without a buffer people waste way too much mental energy and time managing cash flow and ‘keeping their head above water’. This takes their focus from their customers and staff and wakes them up in the middle of the night.

Note: I am not affiliated with any insurance providers, legal or accounting businesses. In other words, I have nothing to gain from this blog except to hopefully help some of you to take action in this critical area of life and business.