Having a family is one of the milestones in life that gets you thinking seriously about your financial situation. After all, we want to be able to afford a good life for our children. Luckily, you don’t need to be a millionaire to provide financial security for your family.
Here are three easy things you can do today.
1. Protect yourself and your income
Your ability to earn a living is one of your most important gifts to your children. After all, your income provides them with food, shelter, clothing, and a good education – as well as the fun stuff like family outings and holidays. So it makes sense to ensure you have adequate income protection.
You should also ensure that you have life insurance to protect your children if you should pass away or become terminally ill before your kids are financially independent themselves. When you’re deciding on how much insurance to take out, make sure you factor in all your family’s living expenses, including education fees, holidays and repayments on the family home.
Even if your job is taking care of the family and you’re not earning money, you may need to pay someone to cover for you if you became seriously ill. Trauma insurance can help cover these situations, with a lump sum payment if you’re diagnosed with a serious illness.
Insurance premiums can add up, but you may be able to reduce the cost by taking out cover through your super. Before you do, check with your financial adviser to make sure it offers the right level of protection for you and your family.
2. Invest for the future
As well as covering the day to day costs of bringing up your family now, you’ll probably also want to put some money aside for their future. Perhaps you would like to pay for their tertiary education, a car or a trip overseas. Or maybe you’d like to give your children a helping hand to buy their first home.
To help meet these goals, a savings plan is a great place to start. By investing this money in something with a better return that a bank account, you can put your hard-earned cash to work to build up a bigger fund for your children’s future.
The investment you choose will depend on whether you’re investing for a short-term goal, like a family holiday next year, or something long term, like university fees. A financial adviser can help you work out your goals, and then choose investments that match your timeframe and the amount of risk you’re willing to take.
3. Sorting out your estate
Finally, don’t forget to sort out your estate. If you haven’t already written your Will, do it now. And if you already have one, make sure it’s up to date. This is especially important if you’ve been in a previous marriage or de-facto relationship and you want to make sure your money goes to your children, not to your ex-partner.
You should complete a binding death nomination to ensure your super goes to the people you want it to when you pass away. It’s also important to keep your Will and other relevant documents, such as life insurance policies, together and tell your family where to find them in case you suddenly pass away.
Find out more
Your family depends on you; so don’t leave your finances to chance.
For advice specific to your family’s situation, contact us today on (08) 8232 9495.