Personal_Finance_sarang ahuja

Financial security often feels like a tenuous thing. What you can afford today might not be quite so affordable tomorrow, especially if something happens to destroy your income: a job loss, the death of the family breadwinner, or an accident or injury that prevents the breadwinner from returning to work for a long period of time. While you can’t prepare for every possibility in life, you can take the steps necessary to ensure that your family is protected financially.

1. Define financial protection.

What does financial protection look like for your family? Your answer may be different depending on your family’s unique needs. In order to attain financial protection for your family, however, you must first define what “protection” looks like to you. Is it having a cushion that will provide for a few months in the event of an emergency or other unforeseen event? Do you need to provide for your family for a potential period of years in the event of your death? Take the time to clearly lay out what financial protection looks like to your family.

2. Think about future needs. 

When you’re evaluating your financial protection, you need to imagine the position you would be in if something catastrophic were to occur to your family and plan for it. Be sure to take all of the facets of your current situation into consideration. For example, if you’re the primary breadwinner while your spouse stays at home with the children, you might already know that you need to have a life insurance policy that will allow your spouse to complete their schooling, update their certifications, or take other steps to rejoin the workforce without having to worry about money. At the same time, however, you must take into consideration expenses that would occur should the stay-at-home spouse be lost. Small children might have to be placed in daycare, while older ones might have to transition to after-school care. Preparing for the possibility of these expenses should be part of your financial protection plan.

3. Secure your savings.

A life insurance policy and a disability insurance policy will go a long way toward ensuring that necessary expenses are paid in the event of death or injury. To truly secure your family’s financial future, however, you must have savings that will help cover other eventualities, as well. Are you prepared for a long period of unemployment? A sudden illness that requires extensive medical care? Many financial professionals recommend a savings account that has been built up enough to cover six months of expenses. That gives you a cushion while you decide what you’re going to do next. Make contributing to your savings account one of the highest priorities in your regular spending.

4. Start with the necessities.

You can’t build your family’s financial future overnight. As much as you would like to be able to provide everything your spouse and children need even if something happens to you, you might not be able to fulfill that dream immediately. Instead, define actual needs. What’s the minimum that your spouse would need in order to survive following your death? What do your children have to have in order to make it through high school? Make those things the first priority. You can build your financial portfolio from there as your means increase. Take a hard look at what will be necessary in order to accomplish those goals, and make sure you’ve taken the time to run the numbers.

5. Ask for help.

If you’re struggling to juggle the combination of trusts, insurance policies, and investment accounts that will provide for your family, don’t force yourself to keep doing it alone! Instead, reach out to a trusted adviser to help you put the pieces together. That individual will be able to help you go through the numbers and develop a plan to help your family through those difficult days.

Financial protection is about one thing: peace of mind. Life has a way of throwing difficulty your way when you least expect it. Careful financial planning, however, can ensure that your family is financially protected enough to weather those storms. You can’t predict everything, but you can take the steps necessary to secure your family’s financial future for at least the period immediately following a potentially catastrophic event, offering an extra layer of protection and peace to your family.