Protecting your family’s finances is important; it is important so that your family’s future needs are met. Saving your money is also essential should something unexpected happen to you. Life insurance can replace your income and cover debt repayments and funeral costs.
Start an Emergency Fund
Another way to protect your family’s income is to initiate an emergency fund. Years ago, financial experts said that a family should stash away six months of a person’s salary; however, today that amount may not be enough. If extended unemployment comes your way in the near future, it might be wise to look beyond six months, perhaps up to a year or more. One solution would be to increase your emergency fund. For example, if you think $5,000 would be enough for today’s needs, you may want to extend that amount to $10,000.
How About Starting a Long-Term Fund?
In addition, you could create a long-term fund and put away two years of your salary in case something catastrophic occurs years from now. When creating a long-term fund, begin small. Set a goal for one year, and then the following year establish a different, higher goal.
Get Rid of That Debt!
Most importantly, pay off your debt. Keep in mind; nothing drains money faster than debt. So, in order for your finances to keep growing, pay off your debt. What works for some is paying down balances with the highest interest rate first.
Everyone Needs Insurance
In addition, buy insurance. Everyone needs insurance. Included in “must have” insurance policies are auto insurance, life insurance, and homeowners insurance. It is also important to have disability insurance. This insurance replaces some of your working income if a disability prevents you from working. Short-term benefits of this insurance expire within three to six months. Long-term disability insurance pays a percentage of your salary. The benefits of long-term disability insurance last until you can go back to work.
Don’t Forget Estate Planning
It is also essential, as part of planning for your family’s financial future, to think about estate planning. Estate planning involves the creation of wills, the division of your property and assets, provides for your family and will eliminate any uncertainty about your family’s financial future.
To conclude, protecting your family’s finances is crucial. Begin your financial planning soon and be prepared for the future.