Aware Insurance Services

Written by Sara Bailey Thewidow.net | info@thewidow.net

Having a family means everything changes. While it used to be okay to spend money on the fly, you now have children depending on you. With smart planning, you can ensure financial security for yourself and your youngsters.

Create a budget. One of the basic elements in financial security is a solid budget. It should be based on actual numbers, not on estimations or future expectations. In order to create a budget, you should begin by calculating your total income. That number should include all your resources, so if there are multiple jobs, a Social Security income, or other sources of income, you should include them in your total.

Then list all your monthly expenses with amounts.The list should include all your firm numbers, such as your rent or mortgage payment, car payment, and other debts.Don’t forget to include an amount that will go toward annual or quarterly expenses, such as homeowners association fees or vehicle registrations. Tally the total for the year and divide by 12 for the monthly amount.Include your other savings, such as an emergency fund.The list should also include more fluid expenses, such as for groceries, entertainment, and clothing.

Once you have your expenses figured, deduct your total monthly expenses from your total monthly income. If you end up with money left over, add it to your savings. If you’re in the red, you need to adjust your expenses until you zero out. The easiest place to adjust is usually your fluid expenses.

Insurance policies. There are many kinds of insurance policies, and it can be overwhelming. As a rule of thumb, some experts recommend all families have life insurance and disability insurance and do some basic estate planning.

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Before purchasing life insurance, you should understand the types of policies, as well as how the cash values and premiums vary. There are added benefits in purchasing a life insurance policy; for instance, you could opt to sell your life insurance in retirement to free up cash.

Disability insurance is another key for protecting your family. Disability insurance pays if you experience an injury or illness preventing you from working. It may seem like a remote possibility if you are young and healthy now, but as NerdWallet points out, “more than one in four 20-year-olds will experience a disability for 90 days or more before they reach 67.”

Estate planning is an often-overlooked but important part of financial planning for families. Some of the components of estate planning include choosing guardians for your children if anything happens to you, establishing a will, and legally appointing people to make decisions on your behalf if you are unable to do so. You should connect with an attorney to discuss your options, and remember nothing is written in stone. If your situation changes over time, documents can be updated.

Net worth. Your net worth gives you an idea of your overall financial health. You can calculate your net worth by tallying your assets and liabilities. Assets are items you own outright, and liabilities are things for which you owe money. As part of those figures, you will need a home value estimate. Investopedia offers an interactive net worth calculator you can use to help with your final total.

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There are a number of ways to increase your net worth. As The Christian Science Monitor explains, some of the opportunities for improving net worth include additional sources of income, reduced spending, lowering your debt, buying insurance, or making investments. Any of those decisions improves your financial health, and all of them together offer you the best scenario.

Your future and theirs. Having children isn’t for the faint of heart. Suddenly, another person is entirely dependent on you, and your burden of responsibility is forever changed. A solid financial outlook can provide security for you and your youngsters, now and in the future.

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