Your spouse and children may be your greatest joys in life, but do you also get a little stressed out when it comes to financially preparing for anything and everything that might be thrown your way?
You never know when Susie might fall off the jungle gym and need a visit to the doctor, or what if your spouse was suddenly laid off? In a worst case scenario, what if you or your spouse was to unexpectedly pass away? Maybe you have actually considered all these situations, but did you do anything to prepare for them?
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Let's face it: Having a family is a huge responsibility.
Everyone needs to take time to manage their finances closely. If you have a family there are a few steps you really can’t afford to skip. Let’s go over these financial steps you can take that will help keep your family financially sound no matter what life may bring.
1. Get Life Insurance
Are you married? Do you have children? Then you need life insurance. If something were to happen to you, your family would suffer not only emotionally but financially as well. Term life insurance is very affordable. In fact, 80 percent of consumers overestimate the cost by a large margin. Surveyed Millennials overestimated the cost of life insurance by 213 percent and Gen Xers overestimated it by 119 percent.
If you’re relatively young (30s) and healthy, a term life insurance policy can cost even as little as $13 a month. Obviously not everyone fits into this category but term life insurance can still fit in most budgets. Find out for yourself how much life insurance may cost you by running term life insurance quotes at Quotacy.com. No need to enter any personal contact information either; window shop in peace and then easily apply right online when you’re ready.
2. Review Beneficiaries
Do you already have life insurance? Perfect! Maybe you planned ahead before you even had a family and took advantage of the inexpensive rates of your youth. After every important life event such as marriages, births, home purchases, job changes, etc. it’s important to review your life insurance policy to make sure it still fits with your lifestyle.
Keeping your beneficiaries up-to-date is extremely important. For example, if you ever go through a divorce and then re-marry I assume you’ll want your current spouse and not your ex to be the beneficiary of your life insurance policy. There are many horror stories of individuals forgetting to update their beneficiaries and they pass away leaving their spouse with nothing and their ex with everything.
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3. Consider Disability Insurance
Let’s say it wasn’t Susie who fell off the jungle gym, but you did. Maybe you were chasing Susie. Maybe you were just reliving your younger years, we’re not here to judge. Either way, if you were seriously injured and could not go to work, would your family be OK not getting that steady income while you recovered?
Without your paycheck, could your spouse keep up with the mortgage, groceries, kids’ school expenses, car payments, and credit card bills alone? Half of surveyed working Americans said they wouldn’t make it a month before financial difficulties set in. This is when disability insurance (DI) would be life-saving.
If you are unable to go to work because of a serious injury or illness you would still receive an income until you’re able to return to work.
4. Open a Retirement Account
The idea of putting some of your hard-earned money into an account you can’t touch for years may not be the most alluring idea. However, the fact is that you don’t want to have to work just as hard as you do now all through your golden years.
Many seniors still work. But wouldn’t you like the option to work because you enjoy it versus it being necessary in order to pay bills? The younger you are when you open a retirement savings account, the more money you will accumulate because it has more time to build interest and grow.
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If you don’t start saving for retirement now, how will you pay bills when you’re older? Are you going to look to your children to take care of you? They have their own financial concerns. If your employer offers a 401K take advantage of this especially if they offer to match your contributions (typically up to a certain amount). This is free money!
The easiest way to fund your retirement is to have a portion of your paycheck automatically deposited into the account each month. This way you never even see the amount of income you are “missing out on” until you retire and it’s time to cash in.
5. Have an Emergency Fund
Financial advisors recommend that you have enough cash in an emergency fund to cover three to six months’ worth of living expenses. For some families that are already on a tight budget this may seem impossible. However, some money in an emergency fund is better than a non-existent emergency fund.
If you don’t have an emergency fund, start one today. Be sure to have your emergency fund cash in an account that you can access easily and immediately if necessary. For example, a savings account is a good option because there is no penalty to remove your money and it will earn interest. (It’s important to note though that you can be fined if you make more than 6 withdrawals from your savings account within a statement cycle.)
A money market account is a great option as well, but they typically require a higher minimum balance to avoid fees so if you’re starting out with a small balance you may want to avoid this.
As a family, determine how much money you can reasonably set aside each week. Then you should have it automatically deposited into your emergency fund account. Many employers allow paychecks to be portioned out into different accounts. If your employer does not offer this, you can likely set up these allocations through your bank online. You’ll rest easier knowing you have some money set aside for those just-in-case situations.
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These financial tidbits are a lot to think about.
Planning for the unknown future is a little scary, but necessary. Once you accomplish these tasks though know that if the unforeseen were to happen, your family will be OK financially.