5 Ways to Secure Your Family Financially
Your family’s financial security is of the utmost importance but taking the time to establish a long-term family financial plan tends to fall to the bottom of the to-do list for most families. This is especially true when everything seems to be going well in the present moment.
But just because you are comfortably providing for your family’s needs and wellbeing today, it does not mean that you have set a stable financial future for your family’s security.
Following, we specify five ways to help stabilize your family’s financial security.
Have a Financial Plan
You will find it difficult to establish financial security if you have not defined what that means for your family. Setting long-term needs and objectives for your family is the most crucial step to putting your family on the road to financial security. These goals may include retirement planning, your children’s education, lifestyle goals, philanthropy etc.
Your long-term financial plan becomes your road map to reaching your destination of financial security. Experienced input from a financial professional can be of great value at this stage.
Create an Emergency Fund
Creating an emergency fund is key to providing you with financial peace-of-mind. It is necessary to be able to cope financially with a sudden decrease in income or unexpected emergency expenses.
An emergency fund should be large enough to cover at least three to six months of your family’s living expenses. You can contribute a fixed allocation to this fund each month until it reaches the required balance for your family’s needs.
Pay Down “Bad” Debt
“Bad” debt is any debt that costs you more than it provides, and includes credit card debt, car loans, student loans, or any loan taken to purchase a depreciating asset.
Paying down this kind of debt as quickly as possible should be your top priority. Carrying debt creates anxiety and financial stress. Paying off debt will enable you to contribute more positively to your family’s financial security. Many people fall into the bad habit of just paying the minimum owed each month. However, the principal amount may continue to increase, interest piles on, and even the minimum payment may increase each month.
If you cannot pay down all your bad debts at once, one strategy is to make all required minimum payments each month and then starting with the debt with the highest interest rate, use any extra money to pay down the principal on that debt.
Protect Your Income
Protecting your income most often involves the use of insurance products. These can be in the form of health insurance, disability insurance and life insurance. Insurance is necessary for the family income earners in the event that illness or death interrupts their earnings capability. Working with an insurance advisor will help you acquire the optimal insurance for your personal situation.
Plan Your Estate
Estate planning deals with what happens to your assets on your passing. It is vital in providing for your family’s security after your death. You can use it not only to ensure your family’s financial security but to maintain a family legacy beyond just one generation.
An estate plan can involve a will, power of attorney, trust arrangements etc. It is best to involve the expertise of an experienced estate planner as there are a number of potential legal issues and estate structures that may require their expertise.
To ensure your family’s long-term financial security you need to establish a comprehensive financial plan. Every family’s financial situation is different, and therefore, every family’s financial plan will differ. Working with qualified financial professionals to establish your plan will provide you the confidence that your family’s financial security is well established.
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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.