5 steps to secure your family's financial future
We all want our children to be safe and secure in life and part of that is ensuring their financial future. Thankfully, there is plenty that you can do as a parent that can go towards strengthening your family’s financial situation and also giving your children a helping hand as they grow up. Here are five of my favourite tips to help secure your family’s financial future.
Put retirement plans in place
First of all, you need to think about your own retirement. If you start saving now, you will have a sizeable income to take during your retirement, and this will mean that you won’t have to rely on your children to support you when they are adults. If you don’t already have a pension, you should take a look at Smart Pension to see what they can offer you. If you are in full-time work, you should also make sure that you are signed up to the employee workplace pension scheme if you are in employment. But don’t just rely on pensions - you should put some other savings and investments in place for retirement too.
I have just started saving towards a pension and have been saving for 1.5 years. I have 30-35 years to save a pension and this panics me so much. Save as much as you can from as young as you can! My husband is employed and his work tops up how much he puts in, so if you’re employed you can get a really great deal from a workplace pension.
Take out life insurance
It’s also necessary to take out a life insurance policy cover for you and your partner. That way, if one of you were to suddenly pass away, the rest of your family won’t have to worry about losing your income. You can choose the lump sum amount you’d receive in this instance so it can pay off any mortgage and debts and leave you a substantial income to last however long you need.
We had to take out life insurance as we have a mortgage and it’s a part of the terms of the mortgage. However, it’s a great idea even if you are mortgage free as it will ensure you have a lump sum or income if the worst happens.
Write a will
As well as taking out life insurance, it also makes sense to write a will if you don’t already have one in place. This is especially important if you own your own home. Once a will is in place, you won’t have to worry about how your estate is distributed in the event of your death, as solicitors will have to ensure that it is divided in accordance with this legally binding document. It ensures your money goes to exactly who you want it to, such as divided equally between your children.
As soon as we had children and were purchasing a home together, we wrote a joint will. It explains what will happen should one of us die, both of us die, or even if all of us die. We know our estate will go to the people we have named.
Reduce your debt
If you are in a position to, you should work on trying to reduce your debt. The first way to attempt this would be to try to increase your income if you can. If you aren’t able to do that, you should review your budget and see if you can cut down on any expenses. Both of these strategies should leave you with some extra money at the end of the month to put towards your loan and credit card repayments.
If you have credit card debt then make sure you are on a 0% interest rate if possible. Many lenders offer this for a few months as an introductory offer and it’s worth moving to new 0% deals so you never have to pay interest on the debt whilst you work on clearing it.
Open a children’s savings account
One other way to give your children a good start in life is to start saving for them. In fact, you can start saving for them as soon as they are born as most banks will let you open a bank account for them in their name. You might be surprised at just how much you can start saving for them if you put away £10 or £20 every month during their whole childhood.
We have a direct debit for £20 per child each month to go into their accounts until they reach £1500 each. This will be money they’ll have access to when they reach adulthood, then we plan to save into a savings account of our own each month so we can have some control over what we give them money for after they have spent this.
If you have already done a few things mentioned in the points above, then you are already well on your way to securing your family’s financial future!
Want to manage your finances better? Here are loads of family finance tips and helpful debt articles.