The International Monetary Fund is stress testing major banks from 18 countries to see how they would weather another global financial shock. Australian banks will be amongst the first to be analysed.

While predictions of another financial shock coming out of Europe have calmed over the last week (even after the S&P credit downgrade) the world isn’t in the clear just yet.

We all should be taking a leaf out of the IMF program and stress testing our personal finances. It’s worth doing the exercise.

What would happen if you lost your job, died, contracted a long term illness or have a big medical bill.

Don’t ignore the prospect, it could happen to any of us. Understanding the financial fall out will motivate you to come up with a contingency plan.