Crisis. That word alone brings fear and anxiety to most of us.

The recent earthquake in Japan and the resulting tsunami vividly illustrate how an unexpected crisis can arise. The earthquake was unexpected but not unplanned for. The Japanese know they are in an active earthquake zone. Worse was the tsunami triggered by the earthquake. It created a situation that was worse than anyone could have foreseen.

Things in our lives and our world are interconnected. Ripple effects are seen all over the world from the disaster in Japan, from all the turmoil in the Middle East and parts of Africa and from economic troubles in various European countries. Oil prices are up, then down, then up again. As a result gas prices and jet fuel prices are affected. Food prices are up, and so on.

This should not take us by surprise. As I wrote in my first column, trouble is one of life’s certainties. If we are aware then we can try to make necessary adjustments.

In our everyday lives our financial crises are not on the scale of the devastation and long-term problems of the earthquake and tsunami in Japan.

Are you prepared for a financial crisis? Obviously, when a financial crisis (or any other type of crisis) occurs, having done some preparation ahead of time enables us to deal with the crisis better than if we are totally unprepared.

Financially speaking, we can prepare for crises by:
– Having some money set aside – an emergency fund or cash cushion as I discussed last month.
– Having necessary and appropriate insurance in place – homeowners, auto, health, life, disability, liability (or umbrella).
– Having people in our lives that we can rely on or call for help or support during a crisis.
– Having savings and investments on which to draw.
– Having retirement savings and equity in a home, although these should be resources of last resort.
– Having powers of attorney for health care and finances so others can make sure your affairs are handled appropriately.

In my columns I keep coming back to common themes. Why is that? Because, like it or not, almost all aspects of our everyday lives are affected by money. We should not be consumed by money, but we have to recognize its place and importance and its impact in everyday life and plan accordingly.

The turmoil that began over two years ago continues today but in a variety of forms and a variety of places. Weathering the storms will be difficult at times, and the potential for a crisis will not go away.

Savings, insurance and patience are things that provide a good foundation from which to handle a crisis. As in Japan, all we can do is be prepared.

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