Definition of contingency planning
Foresight is a financial planning measure that involves preparing for the future by anticipating risks and putting strategies in place to deal with unforeseen events with peace of mind. Foresight is generally associated with unexpected events such as accidents, illness, loss of employment, death, and retirement.
Anticipating risks
The first step in planning for the future is identifying potential risks that could affect your financial and personal life. These risks may vary according to age, state of health, profession, and family situation. For example, if you are young and in good health, you could anticipate the risk of an accident or illness by taking out health or disability insurance.
Implementing strategies
Once you have identified the risks, you need to put strategies in place to mitigate or avoid them. These strategies may include buying insurance, saving, investing, setting up an emergency fund, planning for retirement and drawing up a will. The aim is to create a financial and administrative safety net that will enable you to cope with any unforeseen events that may occur in your life.
Regular assessment
Pension funds require regular assessment to ensure that your strategies are still appropriate. Changes in your life, such as the birth of a child, divorce, or illness, can affect your pension needs. So, it's essential to review your pension plans regularly to make sure they are up to date and still meet your needs.