3- Paying for Life’s Financial Emergencies with Crowdfunding Cash
Actualizado: ene 15
Crowdfunding platforms such as GoFundMe, Indiegogo and Generosity are used by thousands of people every day to raise money for projects, causes and life events that need cash funding. Theses sites deliver millions of dollars for identified variety of needs and can provide significant benefits to their users. This post are discusses how you, as an individual, need to effectively protect yourself and your dependents against the financial risks of life in the FinancialVerse.
Let’s begin by asking, Should you rely on these sources to provide cash for the emergencies in your life? Will crowdfunding provide the amount and timeliness of money in the future when it is needed most? Will you be effective in your fund raising campaign? Do you have the expertise to make this happen?
My answer to these questions is an emphatic ”No!” Based on my research, only about 40% of campaigns raise their target amount. It is hard to find this information as most of sites do not publish success rates. Let me help you understand why I feel this way and why relying on crowdfunding may fall short
In the past year my social circle has seen at least two instances where a friend or a relative had an event take place that caused them to be short of cash. One involved a medical emergency and the second, the death of 20-year-old student after an illness. In both situations, the families resorted to crowdfunding sites to meet their financial needs. They raised some but not all of the cash required to pay medical and funeral expenses. These families had no emergency funds and lacked sufficient health insurance or life insurance coverage to get the financial resources they desperately needed.
In my view, each individual needs to take the appropriate steps to get their financial house in order. Taking focus away from the urgent nature of this week’s events to sacrifice for the longer term can be challenging, but in doing so, you will have adequate financial resources to help pay for an emergency or unpleasant life event in the future.
To accomplish this, individuals need to have cash inflow in excess of cash outflow, an adequate emergency fund, and possess insurance coverage protecting against key risks.
While this is often more easily said than done, each is an important element of a sound financial plan. The mindset needs to change, where people begin putting long-term goals and protection ahead of short-term indulgences. Several options are available, including personal budgeting computer applications which are very inexpensive and can be accessed from a smartphone or tablet. With individual life insurance, premium rates are at all-time lows, making life insurance quite affordable. Taking steps to insure children, although controversial in some circles, makes real sense to me, and many employee benefit plans offer life insurance for dependent children.
Here are the major financial holes most people need to fill as part of their financial planning:
Cash on hand to pay health insurance deductibles and coinsurance amounts.
Sufficient emergency funds.. As we see in the press about 60% of households could not handle a surprise bill of over $400.
Life insurance on the lives of each income earner and on any minor children.
With minor children, buying life insurance protection at young ages covers them in case of unexpected events and, if properly positioned, allows them to convert the coverage to more appropriate coverage as they enter adulthood. You will never know if a child will encounter an unexpected health issue, drug addiction or other unfortunate circumstance that would prevent them from getting life insurance coverage later in life.
Proper insurance coverage for their car, apartment or home.
Proper liability coverage for themselves and their family. This may include purchase of a personal umbrella liability policy.
By checking these items off the list, you begin to put your financial house in order and create a solid foundation for the road ahead. No matter what life brings, you and your family will have the resources needed to cover unexpected costs and still meet day-to-day obligations — providing remarkable peace of mind.