No one expects catastrophically bad things to happen to them. Yet terrible things happen to people who didn’t expect them every single day of the year. No one can become immune to tragedies but you can be better prepared for disasters before they happen. That way, when disaster strikes, you  and your family are not taken off guard and will survive with as little hardship as possible. Five things in particular come to mind when I think about how best to protect oneself against future problems and headaches:

1. Become financially secure.

I know you are probably saying “Easier said than done!” But with a little discipline and dedication it can be done! Money can protect you against many disasters, and make many other problems easier to deal with.

How much wealth should you strive to accumulate? Ideally, your goal should be to put away about $2 million in liquid assets. This $2 million invested at a 10% annual return will provide you with an income of $200,000. Which can go a long way if a catastrophic illness or other crisis prevents you from working, since you will be able to live off your investments.

If the $2 million dollar figure scares you and you say to yourself “Wow! $2 million dollars, how am I ever going to save that much. I am so horrible at saving money.” Stop! and try to take it step by step. Start by putting away as much as you possibly can each and every week. At first, put this money into an emergency fund until your emergency fund has about six months of living expenses in it. After you have reached this milestone start investing the additional savings in something like dividend paying stocks or whatever you are comfortable with. Too many people constantly make excuses for themselves as to why they live paycheck to paycheck without saving a dime. But the reality is that you can always find somewhere you can save money. Do you really need to go out to eat five times per week? Perhaps you can go out to eat only once per week, eat at home the rest of the time and put the extra money into your savings instead of spending it. There are always ways to save and you need to stop cutting yourself short and start taking action for your future. And if your business fails or your career goes south, you will be able to live off your investment income until things improve.

2. Buy life insurance.

Until you are able to accumulate the $2 million you will need to become financially secure, you need to be able to leave an estate big enough to ensure a comfortable life for your family in the event of your untimely death. Do you really want your spouse to be forced to sell the house and make the kids move?

Although a $2 million estate would be perfect, your spouse would most likely be able to get by nicely even with a 1 million dollars in term life insurance in the event that something terrible happens to you.

Keep in mind that it is best to buy this life insurance while you are still young, before you have any serious illnesses.If you decide to buy life insurance after you are already sic, the cost would be astronomical.

3. Buy health insurance.

Millions of Americans do not have health insurance and are gambling their family’s entire financial future. One major illness can easily wipe out your entire life savings. For this reason everyone really needs to have health insurance. If you can’t afford a private policy, join a group that offers discount coverage to members.

If you have an HMO, make sure that you select doctors who are taking part in your insurance plan. This way, all your doctor visits will be covered by your health insurance plan, greatly reducing your out of pocket health care costs.

4. Create sources of passive income.

Have you ever considered what would happen if you where no longer able to work? Anything from an accident to a debilitating illness can prevent you from working and disability payments are usually very minimal. A much better way to prepare for something like this is to start creating sources of passive income right now. These are sources that generate money for you without your daily attention.

Dividend paying investments are just one source of passive income, especially investments that pay a monthly dividend. But there are many other forms of passive income. One great way to start building  your passive income portfolio is to get into investment real estate by owning one or more rental properties. This can provide you with badly needed income in the event of disaster. And as a side bonus it will also build your equity since your renters will be paying your mortgage on the property.

You can also make a good passive income online by running one or more websites which bring in revenue on a regular basis. There are many successful business models to make money online. You can create a content rich site or blog which people find useful and when it gets popular enough you can generate good income from both direct advertising, Google Adsense or various affiliate programs. You can also run an e-commerce site that utilizes drop shipping methods so you will not have to do much if anything to get orders to your customers. These methods are not 100% passive as there is quite a bit of work that would have to go into online marketing and promotion to get to the profitable level, but once your site is making the money it is fairly easy to automate most things and outsource things like content creation leaving you free to enjoy the fruits of your labor. Just think how nice it would be to get a large check from Google each and ever month without having to do a thing.

5. Live for the moment.

At first glance, this may seem quite contrary to the idea of being “prepared for the future.”  But if you think about it, it really isn’t.  You cannot live your live constantly worried about money. All this will do is cause you stress which can help put you into an early grave. So it is important to take at least one vacation a year. You may not be able to get away for two or three weeks but should force yourself to go away for at least one week of rest and relaxation. You don’t have to spend a fortune going on a luxury vacation but you need to take a nice relaxing break from the stress of every day life. You never know what will happen tomorrow, you can go outside and get struck by lightning and it’s all over, so you need to live your life to the fullest today, spending quality time with your loved ones and enjoying life.

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