Are you the primary source of income for your family? If so, then you know that it is not only your responsibility to “bring home the bacon,” but protect your family from a financial crisis.
If 2020 has taught us anything else, you have to be armed with financial tools in order to protect your finances from potential money troubles. Husband or wife, mother or father, here are five powerful weapons you need to have in your arsenal to protect your family from possible financial ruin.
1. Build and Maintain an Emergency Fund
The single most important lesson to take away from 2020 is to make sure you have an emergency fund. Start building this right now. There’s no secret formula, but financial experts suggest saving enough to cover three to six months worth of your regular expenses.
2. Protect Your Family with Life Insurance
If you have a family, you must face the unpleasant fact of how they might survive with you out of the picture. This is especially true during the pandemic. You must have life insurance. Regardless of who the primary income earner in the family is, both spouses should have life insurance. Even if you are facing reduced income now, do not overlook the importance of life insurance. Consider using a small amount of money to open a life insurance policy. Term life insurance — which covers you for a set number of years — can cost less than $1 a day, and the payout to your family will always be tax-free.
3. Be Sure to Have Adequate Health and Disability Insurance
Just as important as life insurance is medical insurance. Medical debt is the number one cause of bankruptcy in America. A single serious illness or critical injury can wipe out most family’s savings and assets if you do not have adequate insurance coverage. You should also be sure to have private disability insurance. Disability insurance will help pay your non-medical bills if you cannot work due to illness or injury.
4. Reduce Debt
Not mounting up considerable debt, and reducing what debt you have, may be the best way to protect your family’s finances — especially if high-interest debts like credit cards are draining more of your cash each month. So long as your credit score is in decent shape, you should consider consolidating your debts with a personal loan. With a good debt consolidation loan, you can replace all of your debts with a single loan at a much lower interest rate.
5. Engage the Services of a Professional Financial Advisor
One of the best ways to ensure that you are protecting your family from a potential crisis is to not go through it alone. Even Batman had Alfred and Robin to help him. You can be your family’s best financial “hero” by working with a certified financial planner.