How wonderful it will be to control whatever happens in your life and predict what will happen to you in the future. However, no one can determine what life will bring, as it often tends to throw unexpected situations your way that can put your family in an uncomfortable place if you’re not financially stable. A Bankrate.com report reveals that only 39% of Americans can foot a bill of $1000 for an unexpected expense. While you can’t control every issue, you do have the opportunity to put systems in place to handle them effectively while setting up a solid financial future for your family. If you’re wondering how to secure your family financially, here are some tips to help you out.
Settle your debts
Incurring debts can put a strain on your finances and restrict you from spending your money the way you please. It can get more strenuous if you have children, as taking care of them demands a lot. According to a report by the United States Department of Agriculture (USDA), the average cost of raising a child until age 17 is estimated to be $233 610, which goes into their housing, feeding, and other expenses. To attain financial freedom and security for yourself and your family, you need to pay off any debts.
You can start by creating a debt list to ascertain how much you owe and when you should settle them. You should also prepare a realistic budget to help you allocate your money to your various creditors. It will help if you start paying the debts with the highest interest rates, as postponing them will only accrue more interest and increase the amount you have to pay. If it doesn’t affect your budget, you can pay above the minimum amount required each month. It won’t hurt if you transfer spare cash into your debt payment, as the goal is to get rid of them completely.
Set feasible financial goals
Setting financial goals is essential should you desire a conducive economic environment for your family. Not only do they help you plan how you spend your money, but they also help you set priorities and monitor your progress. They also keep you accountable so you don’t misuse your money and fall back into debt. While setting financial goals is commendable, knowing how to go about it makes all the difference between attainable and impractical ones.
You should first pen down your targets and paste them on your mirror, desk, or car for motivation. It will also help if you’re specific about your goals, as a vague one does little to boost your resolve. For instance, instead of writing “I want to save for a house,” you can rephrase it as “I want to save $500 every month towards my dream house.” You should also set deadlines for attaining your goals and ensure that they’re measurable. To make it easy, you should start with short-term goals, and achieving them will motivate you to set long-term ones.
Embrace insurance
Insurance is another way for you to be financially protected; it buffers up the impact of unexpected events on your finances by covering the costs and keeping your other financial reserves intact. Also, you have the opportunity to select an array of insurance policies to guard against risks in various areas of your life. For instance, you can opt for health insurance, income protection, disability insurance, liability insurance, long-term care insurance, critical illness insurance, etc. This helps take care of any cost you might incur should you have a problem in those areas.
Now, there are certain factors you should consider before buying an insurance plan. First, you should thoroughly research various insurance companies to ascertain the right one for you. It will be best if you’re sure that your chosen insurance company is licensed; you can contact your state insurance department to be sure. You can also compare the monthly fees with the claims to get the best value for your money.
Set aside an emergency fund
Just like insurance plans, an emergency fund caters to unexpected needs without putting stress on your finances or disrupting your financial goals. A bank account is set aside for sudden expenses such as unemployment, major car repairs, unforeseen medical expenses, and home-reliance repairs or replacement. An emergency fund helps to build your financial security by preventing debts that would have come as a result of borrowing high-interest loans or frequent credit card use.
To build your emergency fund, you should deduct a specified amount from your pay every month and deposit it into your account before allocating the rest to other needs. An automated savings account is ideal because it automatically deducts your savings before receiving the rest of your pay. Remember, your emergency fund is strictly for emergencies, so you must be disciplined so that you don’t dip your hands into it without having a good reason.
Acquire multiple sources of income
Although having one steady job is excellent, uncertainties can take it from you at any time. This is why you should have multiple income sources to have a plan B if you lose your primary income source. Even if you don’t lose your job, you still benefit from getting more money from different angles, enabling you to save and secure your family financially.
There are various ways to earn money, and thanks to the internet, you can gather a large client base. You can buy and sell or explore drop shipping if you don’t want to keep inventory or don’t have space to store goods. You can also monetize your skills and talents; luckily, platforms such as Fiver help you get gigs and earn more money. You can also go for low-risk investments, as they generate higher returns than you might anticipate. You can also acquire night or weekend jobs to support your primary one. The more income sources you have, the more money you can save towards your family’s future.
Write a will
Although no one wishes to leave their family behind, life can lead people in unexpected directions. In this case, if you don’t have a will prepared for your family, the state would have all rights to determine what happens to your assets, and not all decisions might be in your family’s favor. Therefore, to protect your family financially, you need to have a will in place. It states how you wish your assets to be shared and how your children should be cared for. It also helps you determine your beneficiaries and your preferred guardian for your kids. What’s more, you’re assured that your family can stand on their own in the event of your death.
You can make a list of your properties and your desired beneficiaries (spouse, children, friends, extended family, etc.). You should also designate the properties to them in the manner you prefer. You can employ a certified lawyer to draft a valid will for you. Thanks to the internet, you can also choose a will from various online wills websites to make it easy for you.
Life is full of uncertainties that can throw your finances off the balance if you’re not prepared for them. Fortunately, you have the chance to secure your finances and provide a comfortable life for your family, irrespective of any circumstance. These tips are not exhaustive but will put you on the path to financial freedom and security while protecting your family from any shortfalls.
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