Generally, safety is high on people’s minds when they think about their families. We aren’t just concerned for their physical safety, but their health and financial security is also important. Although there is no one size fit all technique to protect your family against all uncertainties, there are things you can do to prevent them from suffering in the event of a financial crisis. Here are smart ways to protect your family financially.
Manage Your Finances
It is important to acquire money management skills when you are young to avoid landing in financial challenges in the future. Some of these skills include creating a realistic budget, saving, and investing. But the #1 key to financial security is to learn to “live below your means” i.e. spend less than you make. One way to do that is to only buy what you need and not what you want. Learning and actually practicing these money tricks is good for your financial health and great for your family’s financial future.
Work to Pay off Your “Bad” Debt
Not all debt is “bad”. Bad debt sometimes comes with buying wants instead of needs, but even buying needs like a house can be bad. Bad debt is defined by “Rich Dad Poor Dad” author Robert Kiyosaki as debt that “takes money out of your pocket”. This can be car loans, personal loans, credit card loans, or even home loans… just to name a few.
“Good” debt on the other hand “puts money into your pocket” such as investment property loans, or loans to start a business. Bad debt management can take a toll on your mental health as well as affect your family financially. Avoid loans with high-interest rates, such as credit cards and personal loans. Whenever you create new debt you should have a plan in place to pay off all “bad” debt in as short a time as possible to minimize the interest that you pay. Many personal finance advisors (like Dave Ramsey) have shown that it is possible to drastically reduce or even eliminate all your debt in as little as 3 to 5 years if you put your mind to it.
Buy Insurance
Buying insurance is paramount when looking to safeguard your family. You work extremely hard to fulfill your current and future family needs and desires. But what would happen if unforeseen events happen? If you are the only breadwinner, it is imperative to have an insurance policy to take care of all liabilities if you are not able to work or are not around.
Create an Emergency Fund
Savings is the primary way to strengthen your family’s protection. In an uncertain world characterized by stories of unpleasant incidents, job losses, and accidents, it is crucial to have an emergency fund so that your family can use that fund when eventualities happen.
According to financial experts, you should have liquid cash in a bank that should cover six months of your total living expenses. In case of urgent medical expenses or a job loss, such a fund will come in handy. Implement these tips to protect your family from unforeseen circumstances.
You might also like: