Let us face it. Creating and living with financial security is a goal that all parents want for themselves and their children. The good news is that financial security is an achievable goal. Below you will find tips on building financial security for your family.
Creating A Financial Buffer With Savings
You can’t have financial security without a financial buffer to protect you against unexpected expenses that will inevitably occur sooner or later. Your buffer will be made of, you guessed it, savings.
A good financial buffer can be broken down into three parts. The first part of the buffer should be around $1,000 more or less in a savings account. Such an amount should be able to cover the majority of unforeseen expenses.
Stage two of your financial buffer should include at least three to six months of living expenses. This amount of money in savings will help you get through any periods of unemployment, medical emergencies, or natural disasters that may occur.
The final stage of your buffer should be money set aside for everyday irregular expenses that you expect to occur. This last buffer should be used to set aside money for significant incidental expenses such as car and home repairs, gifts, travel, and any other costs that you expect to have from time to time.
Create A Will, Name Beneficiaries, And Get Life Insurance If You Need It
With a financial buffer in the form of savings, you will be prepared for unforeseen expenses as well as routine expenses. You are well on your way to financial security for yourself and your family. However, what would happen to your family if something happened to you? This is where estate planning and life insurance come on.
Managing your estate involves creating a will and naming beneficiaries. A will is a document that outlines who inherits any property and possessions you may have. It will also allow you to name guardians to take care of your children. Other things in a will that is important are naming a healthcare proxy and power of attorney. This will allow you to designate someone to make medical and financial decisions on your behalf if you are unable to.
You have created a will, but how do you know that your family will be cared for? This is where life insurance comes in. The goal of life insurance should be to replace the income that you provide for your family in case you die. You can also use life insurance to help you or your family pay off debts such as a home mortgage or even fund your children’s education.
Consider Critical Illness Insurance
Even if you have an excellent comprehensive health insurance plan, diagnosis and treatment for certain major medical illnesses can be financially crippling. If you are diagnosed with a severe illness, such as cancer, heart attack, or a stroke, critical illness insurance can help you and your family maintain financial stability.
A growing majority of people diagnosed with these life-threatening conditions live many years after the diagnosis. They often continue to have high expenses, not all of which are directly related to patient care. Critical illness insurance pays out a lump sum that can cover a wide variety of expenses. For example, critical illness benefits can cover the cost of a private nurse or caregiver to stay with the individual. It can also cover transportation and lodging for travel to treatment facilities and lost wages for family members accompanying the patient to treatment.