When was the last time you roamed around with Rs 300-400 in your pocket with nothing else to fall back upon? Most of us are going through such a situation now. Addressing unexpected financial situations should be part of everyone's financial plan but the question is how does one deal with such a situation. Here are some crucial aspects that one needs to incorporate in one's financial plan to tide over unforeseen circumstances.
 1. Have a contingency plan
 To have a contingency plan is the first step in planning ones finances. We have often seen people not planning for their liquidity requirements. This happens because most of the investments done do not take into consideration one's own requirement and it is done in a sporadic manner. We suggest that an individual maintain funds equivalent of cash flow requirements for at least six months in investments that are easily accessible in a day's notice and also yields better returns compared to a savings bank account. We suggest people could look at fixed deposit or liquid funds of mutual funds after taking into consideration the tax implications of both.
 2. Live within your means
  Demonetisation surely taught us how one could live life curbing expenses and be able to save money in such situations. If this could be practiced in one's everyday life and the savings could be properly channelised into good investment options then achieving financial freedom would no longer be a farfetched dream.
3. Have a health insurance
   We have time and again seen cases where people do not receive timely medical attention due to paucity of funds. Hence it is always important that one has sufficient health insurance cover for himself and also his family which could help him with facilities like cashless payments and uninterrupted medical facilities.
   4. Focus on tax planning, never on tax evasion
    The old proverb 'Truth always prevails in the end' is now validated. Once we pay our taxes we are free to invest our money in instruments which would give us the best risk-adjusted return. It is always crucial to understand that it is important to plan your taxes well and invest the post tax income into instruments which help achieve your financial goals over a period of time. But never try to evade taxes.
    5. Diversify your portfolio
     Every portfolio has to have a good mix of physical and financial assets. This helps one tide over unforeseen circumstances and still yield good returns. However, it is seen that people tend to invest heavily in physical assets like real estate which are relatively liquid in nature. This could turn out to be an expensive decision, especially during situations currently we are going through.
      Having a contingency plan to tide over unforeseen financial events should be part of everyone's financial plan. Unforeseen financial events could either be personal or even regulatory in nature. It is crucial that one is ready for such situations at all points of time through effectively planning his finances. Like it is rightly said that you cannot direct the wind but you can certainly adjust your sails. For more such financial planning lessons please