A client recently called me up to discuss what their options were for replacing their income for a short-term medical leave. Luckily, this client and I had addressed the issues of short-term planning and I had an answer. Do you know what yours would be?

Short-term disability insurance (STD), Employment Insurance (EI), or an emergency fund are key components to discuss when looking to address the “what if” situations in financial planning. Many of our  clients bucket their money into different groups;
1.    Emergency Fund – if the furnace breaks down, unplanned medical leave, etc
2.    Short Term Goals – yearly holiday
3.    Long Term Goals – house purchase, renovation, wedding
4.    Retirement
This helps people attach an emotional value to each bucket. It can help them plan the associated risk for each investment goal, the intended return or final figure, and helps them mentally compartmentalize when it is okay to spend the money or not.