There are really no guarantees when it comes to the modern economy. However, that doesn’t mean that you can’t work and prepare to avoid the very worst possibilities. Especially when you have a family, you need to create a financial safety net to avoid facing destitution after an emergency.
Save Six Months of Expenses
Savings are an essential part of any individual or family’s financial plan. You can save for retirement, for your kids’ future college, for a rainy day – but you need to start saving. Starting as soon as possible is always ideal. The bare minimum that you should plan to have saved is about six months’ worth of expenses, including monthly payments, bills, and basic necessities. Why six months? In the event that you lose your job, you’re going to need to be able to support your family while you search for a job. You never know how long that might take, which is why preparing for six months gives you some wiggle room to work with.
Cover All Your Insurance Bases
Insurance is essentially considered a basic necessity in the United States today. You can’t drive without it. You also can’t go to the hospital, visit the dentist, or recover and repair your home after a break-in without it. Consider carefully your current economic status and which kinds of insurances you could afford. Sit down (with your spouse if you have one) to make a budget and decide what kinds of insurance matter most to you. Take care not to forget possibilities that could be lifesaving in certain situations. You should consider your age, income, and debt levels when buying a life insurance policy, for example.
Safe Investments
Beyond you and your spouse having a steady income from a job or an inheritance, investing is the next most optimal way to start broadening your financial base. Some investments are safer than others – and there’s never actually a guarantee of success with any investment. But there are certain moves you can make that are more likely to bring consistent returns. Buying stock in a growing company, for example, or buying a second property and renting it out to tenants who pay monthly can be solid sources of extra income.
Budgeting and planning are key. Have a specific plan for your family’s financial growth. Try your absolute best to create backup plans for potential disasters. Your family and your future self will be eternally grateful that you did.
Check out this article on what you can do to avoid medical debt!
