While not many of us would complain if we woke up one morning, rich beyond our wildest dreams, most of us fantasise about something much more sedate. Many of us just dream of no more financial stress. We dream of securing our family’s wealth so that they, and we, may be comfortable, not rich. Financial security is about ensuring you can afford to put food on the table, afford the odd fancy holiday, and guaranteeing that if, god forbid, anything was to happen to you, your family would be just fine. We need to prepare for the worst and hope for the best, but the question is: how? How can we guarantee that our family’s financial outlook will always be good, whatever life throws at us? Here are just a few ways:
Avoid debt
Debt is one surefire way to throw yourself into a stressful and uncertain financial future. A secured debt, such as a mortgage, is one thing, but credit card debt and loans can be a lot more problematic long term, especially if they’re not being paid off. Not only does it put your credit rating at risk, but it drains all of your cashflow away from saving and planning for the future, purely to pay off the past. It diminishes the future and looks backwards. If you’re sitting on a bit of debt, stop ignoring it and hoping it’ll go away: it won’t. Instead, start paying it off, just a bit at a time. Aim for the high-interest debts first, they’re the serious drain, so slowly but surely, you feel more motivated, proud of your achievements, and pretty soon all your debts will be gone, and that money that was being allotted to debt repayments each month? That can now start going into your savings account instead.
Take out insurance
Life insurance is essential for anyone, but especially if you have a family. If you’re the breadwinner and you get ill, who’s going to pay the mortgage? If you’re the breadwinner and asset owner and you pass on, who’s going to pay for your funeral? A life insurance policy is essential for covering your family’s backs if the worst does happen. As you get older, it can be trickier to get a life insurance policy which is willing to cover you, so it’s best to start paying in young. If that ship has sailed, check out Lifeinsuranceforseniorsover80.com for advice on how to get life insurance as an older adult. Spoiler alert: all is not lost. And it isn’t just life insurance you’re going to need. Buildings and contents insurance for your home will guarantee you and your family safety and security if something happens to your house. Without these things, if something does happen to you or your home, your family could be left in dire straits.
Simplify your lifestyle
One of the best ways to ensure the security of your family’s financial future is by scaling back your expenditure today. Think of all the extras you pay for to bring a little bit of extra luxury to your life: cable TV, smartphones, toys. While I’m not for a second suggesting you go full stone age, take a moment to consider if you need all of this stuff? The money you’re spending on expendable luxuries, could that be put to better use? Could it be going towards your mortgage, or a deposit for a property? Could it be paying off debts, or going into savings to help contribute towards your children’s university education? Consider what would happen if something dreadful occurred and you lost all of these little luxuries? Imagine a power cut, but darker and more permanent. Sometimes, families have to go through periods of hardship in order to come out stronger on the other side, and one way to prepare for this is by keeping your lifestyle simple. Use the library instead of buying books brand new. Play outside instead of on the computer. Buy clothes second hand and play board games as a family, because you never know when that extra cash could come in handy.
Build short-term savings 
Short-term savings is the money that doesn’t make it as far as your ISA, but sits comfortably in your savings account for a rainy day or a leaky roof. It’s the money that pays for dentist appointments, a new pair of glasses, or new tyres for the car. It’s the money that you never realise you need, until something comes up and your current account can’t quite stretch. Between £50 and £100 a month paid in can really start to add up, and you can skim from it into your ISA if you don’t use it. But it can make everyone that little bit more comfortable knowing it’s there.
Invest in your future
How can you create an amazing future for your kids, if your own future hangs in the balance? Investing in yourself is one of the best ways to invest in them. Aim high at work. Go for promotion, go for training courses, and keep on fighting. We often choose not to take risks, especially where our families and money are involved, and we settle into routine. But if the risk is, all things considered, fairly minimal, and the payoff could be amazing, is it not a disservice to yourself and your family not to go for it, full steam ahead?
Grow your backup fund
We already spoke about short-term savings, but what about the serious backup fund? When you pay into a cash ISA, you’re getting interest on your cash, free from tax, which can sit there and grow for as long as you need it. If you want to invest in stocks and shares, but the uncertainty puts you off, at least start with a cash ISA.
Pass on your knowledge
You know more about caring for your finances than you probably realise. Do you look after your family accounts, pay the utility bills, and ensure you’ve got enough money each month to pay the mortgage? Are you a master negotiator, and great at getting the best deals? These are all skills which, when passed down to your kids, really help to secure their financial future. If you give them the tools to learn the skills of financial security, their own future is set. If you’re going to leave a legacy, it’s giving them the skills to make their own.
Plan your estate
Nobody wants to think about their own mortality, but if you don’t plan for it, you’re putting your family’s financial security at risk. After all, who’s going to manage their money if you’re not there to do it? Planning your estate means planning for every eventuality. This means having a will which covers all of your financial belongings, and how those assets will be divided amongst your successors. It eliminates uncertainty about what might happen at the time of your death, and how your assets might be stripped and accounted for. It enables you to provide a bit of financial security for future generations, decide on care for any disabled family members or pets, and also helps to minimise how much of your estate will be lost to taxation. You will also want to decide who is the executor of your will. This person can be a close friend or family member, but some people also choose to assign a solicitor to this role instead. The executor of a will ensures that your will is followed, and deals with any taxes and paperwork which comes from it.
Ensuring your family’s financially support is as much about preparing for the immediate future as it is for the distant. It’s about keeping money aside for a rainy day, but ensuring that they’re safe and comfortable after your passing too. If you have any concerns or questions, speak to an independent financial adviser for further advice.
You must log in to post a comment.