Creating a financial safety net for your family is one of the most important steps you can take to ensure their financial security. While it’ll require careful planning and saving, you can’t put a price on peace of mind.
These are just a few of the most important things to consider when you start creating that financial safety net. But before we begin, remember that this is only a general guideline and should not be taken as financial advice. These are great starting points, but talking with your financial advisor will help you make the choices that are best for you.
Build An Emergency Fund
An emergency fund can help cover unexpected costs like medical bills or car repairs without having to resort to using your credit card. Ideally, keep at least 3 months’ worth of living expenses in an interest bearing savings account that you can access immediately. Remember, while fixed savings accounts might give you a higher interest rate, should the unexpected occur, you won’t have instant access to your cash.
Get Adequate Insurance Coverage
Insurance is an essential part of any financial safety net so you’ll want to consider taking out life insurance, disability insurance and health insurance. While life insurance provides financial support to your family in case of your untimely death, disability insurance can provide an income in the event of an illness or injury that prevents you from working.
At MiWayLife, we don’t just cover the policyholder in the event of death but also provide up to 50% of the policy paid out to the respective member in the case of terminal illness. As far as health insurance goes, this can protect your family from expensive medical bills.
Pay Off Your Debts
Debt and the interest it attracts can be one of the biggest drains on your finances, making it difficult to invest in the future. Always prioritise paying these off as soon as possible, focusing on the highest-interest debts first. Then, if you can, make a point of always paying for things in full. This might mean waiting longer while you save, but going without – especially when it comes to a luxury item versus a necessity - is better than being in debt.
Create A Budget
Get strict about tracking your expenses, paying attention to even the “little spends” such as banking charges or that croissant you always buy on your lunch break. There are many free apps that can help you keep track of your everyday spending. Once you have an accurate picture of your spending, it’s easier to identify any areas that could do with a trim and redirect that cash towards savings and paying off that debt.
Invest For The Future
Investing for the future is an essential aspect of creating a financial safety net for your family but can seem daunting as it involves a bit of risk. This is why it’s important to chat to a financial advisor who can help you determine the best long-term investment strategy – including planning for retirement – to suit your family’s needs.
Don’t Wait – Start Today!
Creating a financial safety net for your family is a long-game, but one that’s totally worth it so don’t delay the start of this important journey. This way, you’ll be better prepared to weather any storms and on track to reach your long-term financial goals and enjoy plain sailing in the future.
