What’s more worthy of protection than your family?
When you think of the people you love most, your family probably comes to mind.
When you think of your fondest memories, you probably picture your family.
When you think of who you’d give anything for, your family is at the top of the list.
So have you thought of how to financially protect your family if something were to happen to you? It’s no wonder if you haven’t. You likely weren’t taught how to keep your family’s finances safe.
Fortunately, it’s simpler than you may think! Here are a few ways to financially protect your family. Think of these as layers of fortification around the happiness, health, and safety of your home.
1. Create an emergency fund.
This is your first layer of defense. The goal? To catch and pay off any unexpected emergencies before they damage your finances. Otherwise, you may resort to costly debt to pay the balance.
There are two benchmarks for a good emergency fund…
First, it covers 3 to 6 months of expenses. That way you can weather even a significant stretch of unemployment or a considerable expense.
Second, the funds must be easily accessible. Remember, you’re not trying to grow this money into wealth. Instant access is far more valuable than rate of return.
2. Open sources of passive income.
Why? Because there may be times when working for money isn’t an option. If that happens, passive income can make all the difference.
Passive income does require an initial investment of time, money, and/or energy. But once it’s created, it can provide a constant stream of cash flow into your bank account.
Books, real estate, dividend yielding stocks, and even blogging can create passive income. Try your hand at a few with the help of a licensed and qualified financial advisor. If your finances grow tight, passive income may be the boost you need to make ends meet. It’s like giving your finances a second wind when the going gets tough.
3. Secure a life insurance policy.
Life insurance can replace your income in the event of a tragedy.
Think about it like this. If you passed away, your family wouldn’t just lose you. They’d also lose the income you provide. In addition to emotional grief, they may face a financial catastrophe.
Life insurance, when structured properly, can act as a safe house for your family. It can give them financial space to lay low, grieve, and make a new strategy for the future.
That’s why it’s common to buy life insurance that’s 10x your annual income. It gives your family the breathing room they will desperately need in the face of tragedy.
Which of these three ways to financially protect your family is most feasible for you to start right now? For many, it’s the emergency fund. If you don’t have one, let’s chat! We can review what it would look like for you to build one.