However, there are certain expenses that everyone has to incur to survive in this world as well as to maintain one's social status.
Everyone wants to keep one’s family protected. However, not many are aware of how to do so and where to begin, especially financially. Some people think that just making both ends meet and protecting their family physically is enough, while some others strive to build a fortune in a bid to secure the financial future of their family. However, for doing that, just saving and investing is not enough, as the future is always uncertain and anything can happen to someone who can turn one’s financial goals topsy-turvy. Therefore, you need to do many other things also to protect your family not only financially, but also from unforeseen circumstances. Here are 6 smart ways to do that:
Start with paying off your debt
With growing aspirations, debt has become a part of our lives. Whether it is a home loan, personal loan, car loan, consumer durable loan or credit card loan, a majority of people need to take some kind of loans in their lifetime to realize their dreams as well as to meet their short or long-term needs. However, while borrowing is helpful in some circumstances and can also help you acquire some assets and build wealth – like taking a home loan to buy your dream home or taking a business loan to expand your business – not all types of debt are good for your financial health. In fact, mismanaged debts can also cause immense mental stress, apart from affecting your financial well-being. Therefore, before embarking on your journey to build your family fortune, it is vital for you to pay off all your debt, especially high-interest and bad ones like personal loans and credit card debt, while you can take your own time to clear your home loan, for instance, which is taken for a long term and considered good debt for many reasons.
Manage your finances
Apart from having a good debt strategy, you also need to acquire some skills to manage your finances well. That is because in today’s times, when nothing is certain and anything can happen to one’s savings, investments and accumulated wealth, it has become crucial for everyone to learn the tricks of money management – especially, how to live within one’s means, how to create a budget, how to remove unnecessary expenses, how much to save and invest, how to keep one’s money safe, how to consolidate one’s debt, among others. Learning the art of money management is not only good for your financial health as well as the financial future of your family but will also improve your mental health by lowering your stress levels.
Income Protection
The time for secured jobs is almost over. In today’s times, no job is fully secured, unless it is a government one. However, there are certain expenses that everyone has to incur to survive in this world as well as to maintain one’s social status. In a bid to earn a certain level of income, therefore, one doesn’t only need to keep upgrading oneself by acquiring new skills from time to time, but also need to have a proper investment strategy to save as much as possible for the future needs. Thankfully, there are some income protection plans available in the market which can help protect one’s income in case of a job loss or post retirement. To invest in such protection plans, you should use an IRDAI approved portal like PolicyX.com. IRDAI approved websites are trusted sources to make an investment in Insurance or protection plans. Depending on your needs and future requirements, you can opt for a suitable plan.
Begin Estate Planning
You must have heard those famous stories about the Birla clan, the Ranbaxy family and many others – that what difficulties they had to face in the absence of a proper Will. In fact, not only in India, but the world over, the road to inheritance hell is paved with numerous ill-Will stories, and that is why it is important for you to go for proper estate planning. Will or estate planning is important not only for those having substantial wealth, but also for persons like me or you for various reasons. Estate planning not only helps avoid kin friction post a parent’s death, but also proves helpful in cases where there is lack of clarity about the natural heirs.
Take Adequate Insurance
The future is uncertain and nobody knows what the future holds for one. For instance, you may be earning well enough to take care of your present as well as future needs. However, what if something untoward happens to you? How long will your savings last? Who will take care of your family if you say goodbye to this world or get permanently disabled because of an accident? Insurance – particularly life insurance – can come to your rescue in such cases. In fact, anyone who has dependents and is the sole breadwinner of the family needs life insurance. That is because life insurance can not only help you generate a sufficient nest egg for your future needs but can also give your family full financial protection in case you are not around. If you have just started earning or your income is not enough to take an endowment plan as per your needs, or in case you want to keep savings and protection separately, then you should go for a term insurance plan which offers comprehensive protection for your family. The best thing about term insurance is that it is cheaper and most affordable, which can help you take adequate coverage for future needs. Apart from life insurance, you should also take health insurance for yourself as well as each member of your family, so that you are not financially strained in case someone falls sick. However, in all types of life and health insurance, it is advisable to begin as early as possible to keep your premium low.
Have an Emergency Fund
In this uncertain world where almost everyday we hear stories about job losses and other unpleasant incidents, it has become vital for everyone to have an emergency fund in one’s portfolio. Such a fund will not only help us meet unexpected expenses, but can also help us tide over a family crisis. So, as suggested by financial experts also, you should keep some money in a bank account or liquid funds, which should be able to cover at least 3 to 6 months of living expenses. In case of a job loss also, such a fund will come handy as it may take some time to get a new job.
These are some of the vital steps which you need to take if you don’t want to compromise on the financial security for your family and also want to protect them against unforeseen circumstances!