Nowadays it is hard for family heads to be financially secure especially, in case of an emergency. For example, credit card debt has spiked to an all-time high during 2019. The average credit card debt for each U.S. household was $8,398. According to Federal Reserve’s G-19, that’s “$1.07 trillion in total credit card debt divided by 128 million U.S. households. It exceeds the pre-recession record of $1.02 trillion reached in 2008.”
Therefore, it is important to learn and now what family heads can do to protect their family financially in case of an emergency.
Get A Insurance Policy and Look Over It
If you have children or a spouse that rely on you financially, then getting and examining your insurance policy is a must. If the insured loses their life in death, then the family members who are beneficiaries of the policy can keep from sinking financially. Also, just because you do have a life insurance policy doesn’t mean that you should not look over it from time to time. Especially, if you have gone through changes in your life such as a divorce or having another child.
Evaluate Your Needs vs. Your Wants
This could be difficult for you to differentiate, however, deciphering what you are able to do from what you want to do will help you plan better for your families future. For example, you might want to put your kids through college, give them a fund after college until they get on their feet, and provide financially for your spouse for the remainder of their life, however, can you afford it? For most people, this is a clear no.
What you should focus on is that you need enough benefits to take care of the bare minimum of your family’s needs in the instance of your death. This is where having insurance becomes essential. The beneficiary of the policy could actually invest in the stock market and get a good return on it, allowing the policy to supplement the income that was lost in your death.
Begin an Emergency Fund
Unexpected occurrences happen all the time so that is why it is very essential to start an emergency fund. When incidents such as car repairs, property damage, or job loss come up, it usually will affect your cash flow. This is why you should put aside a small amount each week so you can have peace of mind.
Get Disability Insurance
Also, if your family depends on your income and you get sick or injured, having a disability insurance policy as a backup plan, will help you provide for your family’s needs. Disability insurance will pay you a portion of your income if these events were to ever occur. Most people don’t think about having disability insurance. For instance, one survey done by Life Happens shows that most Americans would not have enough money to last for just two months.
Yes, you can get Social Security Disability benefits, however, they award you with a small monthly amount and it can take a year or usually much longer to eventually get the payments. Acquiring disability insurance will prevent you from having to wait so long for funds.
Keep Your Real Estate
Your home could be the most valuable thing you have to leave to your family. Some studies show that older Americans hold $3.3 trillion in home equity. Therefore, before you take out equity in your home or sell it, make sure you understand what you’re doing and put it in writing for your family, so they can understand as well.
Also, when deciding to take out another mortgage on your home you should consider details such as your age, where are you financially, wanting to maintain financial goals, and deciding whether to stay in the home for a lifetime. Sometimes taking out the loan make sense, but always do your research on hidden fees and interest rates before signing any documents.
Pay Off Your Debt
If you’re trying to save money, well, nothing exhausts your savings more than debt. You don’t have to pay off your debt at once but budgeting and making monthly payments can eliminate it over time. First, if you’ve purchased anything that has a high-interest rate you should pay down that balance. However, some people like to pay off the smaller balances first because it gives them a sense of accomplishment and motivates them to continue with their “debt elimination” plan. The choice is really up to you on how you want to eliminate your debt. The point is just continued with the strategy.
Now is the time to start implementing the previously mentioned topics in your life. It will give you peace of mind knowing that your family will be well taken care of if anything should happen to you.