While attending Journalism school, I listend as one of my instructors talked about the importance of having “F U money.” He explained that preparing for an alternative future was vital if we wanted to maintain journalistic integrity.

My instructor was talking about being able to leave a job if we were asked to do something we didn’t agree with. However, the concept also applies to creating a Plan B that you can call on in your financial life.

You Don’t Know What’s Next

Life is unpredictable. You don’t actually know what’s coming. My husband was told that, even though one of the universities he adjuncts for wasn’t going to hire him, he could teach at least one class a semester for as long as he wanted. Well, now that isn’t  going to happen — no matter what the department head promised originally.

plan bNow that this ironclad promise has turned out to be less ironclad than originally thought, my husband is trying to figure out what to do next. He missed out on applying for some great jobs because he counted on being able to continue working at a school he liked, with students he enjoyed interacting with.

You don’t know what’s coming. No matter how well you plan, or what promises have been made, things can change just like that. And you need to be ready for it. In my husband’s case, he has another university that’s already contracted him to adjunct in the summer and the fall, and he’s going to use the extra time on his hands to apply for full-time positions.

But this is made possible by the fact that I am the primary breadwinner, and by the fact that our monthly bills are reasonably small, and that our mortgage is less than 1/5 our income. We can afford the lower income my husband will be bringing in.

Do you have an alternative plan? If you lose some of your income, or if an opportunity you were sure about fails to materialize, would you be in financial trouble?

Or do you have a Plan B?

Creating a Plan B

While it’s not fun to think about what could go wrong, it helps to have a Plan B. As you consider the possibilities, here are some items to keep in mind:

  • What can you cut? Look at your budget. While you don’t necessarily need to trim the fat right now, it’s a good idea to consider what you can do if you need to start pinching pennies later. Identify the first items that need to be cut from your budget, so you know what has to go when you run into trouble.
  • How big is your emergency fund? Consider your emergency fund. Is it large enough to support you as you try to make your business venture work, or as you look for a new job? Can your emergency fund help you meet your deductible payments in the event of a medical catastrophe?
  • What skills do you have? Complete a skills inventory. Look at your skills and knowledge, and think about how you can apply it to different career settings. In many cases, it makes sense to look at how your skills would translate to a different career field. Don’t assume that you have to keep doing the same thing over and over again.
  • How divorced is your income? Don’t forget about your income diversity. Consider developing other sources of revenue so that you aren’t in complete trouble if one revenue stream is significantly reduced.

You need to know that you have options to fall back on if something goes wrong. It makes sense to think about what’s next, and whether you have the resources to meet it.

From what you would do if your life partner died, to how you would handle a job loss, you need to have an idea of what you would do next. It’s important to build your assets so that you have more financial options, and consider alternatives to what you’re doing so that you don’t get stuck in despair when things don’t go your way.

What’s your Plan B?



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.