Will your family maintain their quality of life if you weren’t there?
If you’re the breadwinner or primary provider of your family, this is the kind of question that can give you sleepless nights. After all, the United States is a country where a whopping 53 percent of parents say they don’t have any money saved up for their kids.
But why have sleepless nights and live in uncertainty when you can make a sound family financial plan that will ensure your loved ones don’t get stranded in your absence? Sounds good?
Making such a plan, though, is easier said than done. The good news is the experts are here to help. Continue reading for insight on how to go about making financial plans for your family.
Create a Household Budget
Create a budget. Create a budget. Create a budget.
How many times have you read about the importance of having a household budget? This is the first thing a personal finance expert tells you.
Yet, in a 2019 survey, about 33 percent of households in the U.S. said they don’t maintain a budget. Even if you’re a multi-millionaire without any money problems, you need a household budget. Or, the person in charge of your finances should have a duty to create the budget on your behalf.
A budget does more than allocate money to various household items and utilities. It creates consistency so that even in your absence, your spouse or children know where to spend the money on.
If you were to pass away or fall into a coma today, your family won’t start spending money haphazardly. They’ll likely follow the budget and it’ll even be easier to cut expenses if need be. With a budget, one can easily pick out expenses that are no longer necessary.
A budget also enables you to determine how much of your monthly or annual income you spend on the household. With this information, you’re in a better position to make adjustments when needed.
Create a Family Savings Fund
As an individual, it’s prudent to put some money away, for you never know when an emergency will strike. Your car could break down and need major repairs. Your house could suffer significant damage. You can fall ill.
As a family person with dependents, the need to save becomes greater. The risk of getting into an emergency increases.
If you already have an individual savings account, you might think it’s sufficient to cover your entire family’s needs. This is not the case. It’s prudent to create a separate savings fund for the family.
Depending on the nature of your household, you could encourage other members to contribute to the fund. If you have an income-earning spouse, for example, you can ask them to contribute to the family savings fund. The same goes if you have children who are earning an income.
Teach Your Kids Financial Discipline When They’re Young
Speaking of kids, if you have them, have you taught them any financial habits?
Raising kids who’re financially savvy is a key part of building a financial plan for your family. At the end of the day, the primary goal is to leave your dependents in a state of financial wellbeing should anything disastrous happen to you.
But, it’s one thing to leave behind enough financial assets and it’s quite another thing for those assets to be put to the right use. Oftentimes, what makes the difference is the financial competence of those who get the money left behind.
In this case, let’s assume your beneficiaries are your kids. Are you confident that they’ll be able to use the money prudently?
You can see why it’s vital to teach your kids how to manage money, especially when they’re young. Something like saving and spending money wisely is a habit that develops over time. The sooner you start teaching your kids, the more likely they’re to nurture the habit.
You can also enroll your kids in financial literacy classes.
Get Insured
As your family’s provider, insurance is one of the greatest financial tools at your disposal.
There are various insurance policies to cover various risks. There’s home insurance to cover the damage. If you’re a homeowner, it’s absolutely important to purchase this policy. Add flood insurance if you live in an area with flood risk.
There’s health insurance. Most health plans will allow you to add your spouse and kids who haven’t reached adult age. Healthcare is expensive and hospitalization can quickly result in a massive bill. Without adequate health insurance coverage, you can easily end up in bankruptcy.
Of all insurance plans, life insurance is the one designed for people who want to safeguard the financial wellbeing of their dependents when they’re no more. There are a number of life insurance plans, each designed to meet a unique need.
A financial planning company like Freedom Insurance Financial can help you find insurance products that meet the unique needs of your family.
Have Proper Transfer Plan
You work hard to secure the financial future of your loved ones. You’re saving and making investments.
Have you thought about how easy it will be for your dependents (beneficiaries) to access your assets in your absence? There’s no point stashing away money if your beneficiaries will have a hard time reaching it.
This is where estate planning comes in handy. Consult an estate planning specialist to help you draw an elaborate plan that will ensure an efficient and cost-effective transfer of your assets when you’re gone.
Make a Family Financial Plan When There’s Still Time
When you have a family that depends on you, there’s a lot at stake. You’re certainly doing your best to provide for them but the most important thing you can do is make a family financial plan while you’re still here.
Life is uncertain. Nobody knows what tomorrow holds. Make financial planning for your family a priority.
Keep reading our blog for more helpful financial advice.
