Don’t Bet The Family Farm

Brent Pittman —  06/28/2012

Tractor on a Farm

Have you ever bet it all? Put it all on the line? We’ve all taken chances and sometimes they paid off–other times we lost it all.

With our finances there are certain areas where we shouldn’t “bet the family farm” on. We need stability in our financial lives without high amounts of risk.

If you loose the family farm, you’ll lose the means to produce your crops. Loosing your family farm is like killing the golden goose that lays gold eggs. Be wise and don’t bet the family farm on risky gambles.

Don’t Bet The Family Farm

Avoiding these risks with keep the family farm in tact for future generations.

1. Day Trading & Forex Trading- Beating the index, timing the market, monitoring every detail of the stock market and trying to profit from changes. Day trading in the stock and forex markets is very risky especially when combined with leverage. Debt and Bankruptcy are common for day traders.

2. Your Health- The most common reason for bankruptcies are health related issues. Despite the increasing costs, it isn’t worth going without health insurance. The risks are too high if an accident occurs.

Keeping disability insurance will ensure money will keep coming in if you’re injured on a job. In one study 3/10 workers 35-65 will be disabled for 90 days or longer. Can you afford to be out of work for 3 months?

4. Your Job- No job is safe anymore. Don’t bet the family farm on your job being there for 10 more years.

Continue learning new skills, keep your resume updated and network fresh, start a side business, and create passive income to help with job transition when you quit or are fired from your current position.

5. Your Business- Small business owners take many unneeded risks that can cause them to loose the family farm.

  • Working without contracts with business parters, vendors, customers can cause huge financial and legal problems should disagreements arise.
  • Debt in business is risky and even unprofitable (case study). Running a business debt free and without leverage will ensure the family farm is still around next week.
6. Your Residence- Whether you own or rent, keep the proper amount of homeowners or renters insurance in place. If the price of your home increases, you remodel, add valuables, or other major changes occur review your policy to ensure these changes are covered.

 

Risking your residence to natural disasters can literally destroy your family farm. Flood insurance & earthquake insurance may be needed. Make sure that your residence is protected from  wild fires, hurricanes, and other natural disasters. Premiums may be high, but the risk of total loss is too great.

7. Your Family- Your family is your most precious asset that needs protection. Proper estate planning including a will is a must if you have children or any assets worth mentioning. Protect your family should something happen to you.

 

Creating a family will ensures that proper guardianship is set up for your children and the assets to care for them. Make changes to your will as your family situation changes and assets are added.

Farmers would never risk their means to grow crops the next season. Be the farmer.

What risks are you currently taking with your finances. Have you ever “bet the family farm” and lost?

Photo Credit swisscan (Creative Commons)

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Brent Pittman

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Brent is a financial coach and writer looking for the perfect donut. He believes personal finance should be both fun and accessible to anyone willing to learn.
  • http://twitter.com/Yakezie Yakezie

    I once bought $30,000 worth of stock and started losing about 10%, then I doubled down and it went down another 10%. I then doubled down again to $120,000! After being down $25,000, I cut my losses. I didn’t bet the farm, but I lost a lot of animals.

    Sam

    • http://www.ontargetcoach.com/ Brent Pittman

      Sam,
      That’s a lot of blue chips on the table. Did you have stop losses in place?

  • http://twitter.com/barbfriedberg Barbara Friedberg

    I take calculated risks. I may not “hit it big,” but I’m not going to lose my shirt either.

  • AverageJoe

    I feel like we need more life insurance on my spouse. That’s our next move. I’m glad you covered disability here…people say “I have it at work,” without realizing how little most workplace disabilities cover.

    • http://www.ontargetcoach.com/ Brent Pittman

      Most work plans are for only short term disability or am I incorrect?

  • Greg@ClubThrifty

    I would say that I’m taking a bit of a risk right now by not carrying disability insurance. It is seems so darn expensive, and I’m not sure if I should go with long-term or short-term coverage. Do you carry disability on yourself?

    • http://www.ontargetcoach.com/ Brent Pittman

      Greg, that is on my list to look into. I’m self-employed, so it seems a little tricky.

  • krantcents

    I think I am a calculated risk taker. I always like a plan B when ever I go into something. My philosophy has kept me out of danger often. I am a saver and accumulated enough to retire very comfortably, I have no debt except for a small mortgage which will be paid off in less than 5 years to coincide with retirement.

    • http://www.ontargetcoach.com/ Brent Pittman

      Paid for house as you “retire” from your day job sounds awesome.