“To the people I love. Nothing else matters” – Tony Soprano
As a family grows, the need for protection becomes even greater. With all the uncertainties of the economy and unexpected situations that can arise, it’s necessary to have a plan in place to protect your loved ones.
If you’re a parent, you’ll already know the importance of providing for your children, but there may come a time where they need your support more than ever. Therefore it’s only right that we do whatever we can to protect them.
In this guide, we’ll look at some of the ways you can provide your family with financial peace of mind:
1. Make a budget and stick to it
Easier said than done, but creating a budget is a sound way to save the pennies. This includes managing your spending on shopping, eating out, entertainment, and other expenses. While treating yourself to a meal out or takeaway can’t do much harm, it can quickly add up if you find yourself doing it regularly.
The same could be said for social events and holidays. While it’s important to enjoy your life and create memories, stay mindful of how much you are spending as that money could come in handy later down the line.
To track your income and spending, check your last few bank statements to give you an idea of where your money is going. You may find that you’re spending money in areas that could be otherwise saved or invested for the future.
2. Set financial goals
Goals naturally help us stay on track and focused. So unless you’re a savvy spender, it’s going to be hard to save money without having clear financial goals in mind.
Consider setting short-term goals (1-2 years), medium-term goals (3-5 years), and long-term goals (5+ years). This could include saving for a home, a new car, or even your children’s education. With these goals, you can establish a clear plan on how to achieve them and stay motivated along the way.
As well as the immediate needs of your family, you might want to think about the greater future, like retirement or looking after your grandchildren,
3. Save for a rainy day
We never know what tomorrow holds, in which case, it’s never a bad idea to set aside some money for emergencies. This could be unplanned events like unemployment or illness in which you are unable to work. There’s always the chance of something happening to your home or car in which repairs can be costly, so having some cash set aside could come in handy.
Consider setting up an emergency fund that covers at least three to six months’ worth of living expenses. This can provide you with a safety net in times of need, and also prevent you from having to rely on credit cards or loans, which can come with high interest rates and debt.
4. Buy life insurance
Ask yourself – what would happen if you were to pass away suddenly? If your family is reliant on your income this could massively impact their financial stability and ability to live by their own means. In such scenarios, taking out life insurance could provide a huge help in what is already a difficult time
By owning a life insurance policy, the insurer would pay out a cash lump sum to your loved ones in the event of your death. This money could be used how they see fit, they may use it to cover living costs or even paying off your home’s mortgage. It could also be used to cover funeral expenses, which can be quite costly.
There are two main types of life insurance:
- Whole life insurance – which covers the policyholder for the remainder of their life. The policy pays out regardless of when they die so long as they continue to pay their monthly premium.
- Term life insurance – which covers the policyholder for a set amount of time (i.e 20 years). The policy pays out if they die within this time, if not, it expires and no money is paid out.
Many people can be put off buying life insurance – either because they have savings in place or they deem it unnecessary. However, there may come a time where you have to use your savings, whereas with life insurance you always have the money in place should the worst happen.
6. Write a will
Much like life insurance, having a will in place is essential for protecting your family financially. A will basically outlines how you want your assets to be distributed after your passing, such as money, property, and other possessions.
Without a will, your assets may be distributed according to state laws, which may not align with your wishes. This can lead to disputes among family members and potentially costly legal battles.
By having a will in place, you can ensure that your loved ones are taken care of and that your assets are distributed as you see fit. It’s a simple, yet important step in protecting your family financially for the future.
7. Invest wisely
Investing your money can help it grow over time, which could bolster your family’s finances. However, you need to think carefully about how much you’re investing and the potential risks that could occur.
Rather than invest in one particular asset, you may wish to spread your money across different types of assets. In this instance, you have the reassurance that if one of your investments fails, you still have others that may perform well.
Before you make any decisions, be sure to speak to a financial advisor who can help you assess your financial goals and inform you of the potential risks. They can also help you create a diversified investment portfolio that aligns with your goals.
8. Take care of yourself
It goes without saying, you can’t protect your family if both your mind and body aren’t cared for. While money in itself can be a stressful topic, taking care of your physical and mental health is just as important in protecting your family financially.
Make sure you take the time to look after yourself by following a healthy diet, doing regular exercise, getting enough sleep, and of course, managing stress. This will not only improve your overall well-being but also help to ensure that you are able to continue providing for your family in the long run.
You may also want to invest in policies such as critical illness cover. This policy can payout a cash lump sum if you suffer a serious illness, such as a heart attack or stroke.
While the above steps are important in protecting your family financially, the most crucial aspect is to have a solid financial plan in place. Before you do anything, be sure to sit down with your spouse, partner or immediate family member to discuss your financial goals, needs, and concerns.
