Last Updated on Jan 30, 2020 by James W
Starting a family is a transformational moment in your life and amidst the excitement of becoming a parent, you will also need to take a practical approach to making sure that you put your finances on a firm footing in order to protect their future.
There are several ways to achieve that aim and one of those options is to look at a child investment plan alongside a number of other strategies that should help you to provide a layer of financial protection.
Combining protection with investment
Although you fully expect to live a long life and see your children grow up you always have to be mindful that the unexpected can happen.
If you invest in a child plan you will benefit from the excellent combination of putting your money to work in an investment fund whilst also gaining peace of mind that your family will be taken care of financially if you are no longer around to assume that responsibility.
Combination of Child Plans and Unit-Linked Insurance Plans – ULIP provides the benefits of insurance as well as investment. A single pay out amount is received at the end of the policy term, or in the event of the policy-holder’s death.
Start a contingency fund
Daily family life and running a home can present a series of financial challenges along the way and if you are unprepared for a hefty repair bill or medical emergency that you have to pay for that could soon derail your finances.
A good strategy would be to start an emergency savings fund and keep adding to it regularly so that you can keep your finances on track even when you are landed with an unexpected bill.
Keep a close eye on debt
Many people take on a certain amount of debt and you could argue that it is inevitable if you are raining a family and paying for a home.
However, debt is something that can soon get out of control and it can put pressure on your finances and future plans.
Try to be sensible with credit cards and loans and always aim to pay off the debts with the highest interest rate in order to keep the cost of borrowing down.
Talk about estate planning
It is not always easy to talk about how you want to split up your estate when you are gone but when you have a family you need to address this issue as soon as possible so that you don’t put your family in a difficult or poor financial position in case of your uncertain demise.
Think about insurance
Insurance might not be an exciting thing to talk about, but it is a conversation you need to have, and you will be glad you did when you need to make a claim, whether it is for damage to your car, house, or anything else you value highly.
Have a plan
Another important aspect of protecting your family’s finances is to commit to setting some clear and attainable financial goals.
Having a plan and knowing where you want to be in the future with your money will help you to focus and prioritize.
Create a layer of protection
You will always be fiercely protective of your family and that sense of duty should extend to protecting aspects such as your income and your home.
With products such as critical illness and home insurance available it is easy enough to create a layer of protection that ensures your family is sheltered from adversity, if you are unable to work due to illness, for example.
Are your family finances on stable ground?