Home » BLOG » Personal Finance » 4 WAYS TO ENSURE YOUR FAMILY’S PEACE OF MIND

4 WAYS TO ENSURE YOUR FAMILY’S PEACE OF MIND

This article may include partner links. If you click, visit or buy from these links, we will receive a fee or products from the companies mentioned in this post. Please read our disclosure policy for more details.

 

… AS YOU WORK YOUR DEBT FREE JOURNEY…

 

“Infuse your life with action. Don’t wait for it to happen. Make it happen. Make your own future. Make your own hope. Make your own love. And whatever your beliefs, honor your creator, not by passively waiting for grace to come down from upon high, but by doing what you can to make grace happen… yourself, right now, right down here on Earth.”

– Bradley Whitford

 

I wanted to share these short and simple steps that can make our family more secure as we journey into our financial planning and eventual financial independence.

 

 

HAVE LIFE INSURANCE

 

This should be a no brainer but as of the end of 2016 only about 60% of Americans have had any form of life insurance according to bestliferates.org.

 

This is a marked improvement from 2012 when the LIMRA (Life Insurance Marketing Association) commissioned a study and found around 48% of Americans die every year without life insurance.

 

Just to be clear, Life Insurance is plainly income replacement for your loved ones in case of untimely death and should be aptly called ‘Death Insurance’ since that’s what it is.

 

To the average person, when life insurance is mentioned, morbid thoughts immediately come to mind, but to the informed and responsible person or parent, life insurance is a necessity and one that spells ‘Peace of Mind’ for loved once in case the inevitable happens sooner than later.

 

I personally haven’t signed up for ample insurance coverage until we had our daughter Zoe and ever since I went through Financial Peace University way back in 2005.

 

It was really an eye opener not only financially but also emotionally since it opened my eyes to the possibility that I may unnecessarily burden my family and loved ones in the event I pass unexpectedly, and that for one is something I cannot bear placing on my wife and daughter.

 

Since 2005, I have signed up and have actively carry at least 750K worth of term life insurance which is roughly 10 times our household income.

 

A recent article in Nerdwallet suggest a 10x multiplier when it comes to the amount of coverage needed for income replacement, but the way I see it, since the amount is tax free when disbursed, and assuming it earns 11% annually when invested in the stock market, I don’t see why $750K generating $82.5K/ year won’t be enough to replace my income just in case.

 

Why 11% annual growth you may ask? Well, according to Financial Peace guru Dave Ramsey, a 12% rate of return is what the S&P 500 earned on average since inception in 1926.

 

In layman’s terms, a conservative 11% is the ball park number that I believe is very much attainable.  In fact, it’s also the number I’m shooting for when I setup our 401k retirement accounts.

 

Bottom line, if we want to make sure our family is protected financially just in case something happens to us, it’s about time we get responsible enough and sign up for ‘death insurance’, it’s the most tangible way we can prove that we really love and care for our loved ones.

 

 

 

HAVE AN EMERGENCY FUND

 

This one should be an easier goal, but is also a hard one to get started.

 

Since most of us are natural spenders, especially in America where commercialism has become the norm in the last couple of years; people are enticed to spend their money even though they haven’t yet earned it.

 

Meaning more and more people now are actually in debt to their eyeballs than they were during the crash of 2008 according to a recent New York Times article in May 2017; averaging a whopping $134,643 per household according to financial blog investmenzen.

 

Even though saving up for an emergency fund that is equal to 3 to 6 months of household income is quite a stretch; In reality, this can be accomplished if we simply put our financial plan and goals in place.

 

To simplify, say for example we have a $5,000 monthly household budget and 30% of that or $1,500 goes to debt repayment, that puts our monthly expenses down to $3,500. So a 3-month fund will look like $10,500 and a 6-month emergency fund $21,000.

 

With that kind of cushion, in the event of an emergency, can prevent anxiety and heartache and can also be considered ‘stress insurance’ if we put it in perspective.

 

My encouragement to all of us is, since we all are responsible and determined, we can and should plan for this as part of our immediate financial wellness.

 

 

 

RELATED POST:

 

 

HAVE A FINANCIAL PLAN

 

 

Simply put, a financial plan is documenting how much you earn and where you spend it. A written budget is but one part of your financial plan, but is the most important part.

 

There are a lot of misconceptions of what a budget truly is but for purposes of simplicity, all it is, is writing down your income on paper or with whatever you’re comfortable using, and assigning amounts to your expenses.

 

For instance, say you earn $5000/month just to throw out a round figure, you have to make sure that all your expenses fit into that number, you can’t overspend if that’s the only amount you’re getting in.

 

A recent study conducted by Chicago based BMO Management on a sample of 1000 millennials found that only 24% ‘can demonstrate financial literacy’ and 8% displayed high levels of financial literacy.

 

This is indicative of the emphasis society gives toward responsible money management, which is not a lot. My encouragement to you is to not be one of them.

 

There are a lot of free programs online, best of which is provided by the National Endowment for Financial Education; which recently started a financial literacy program geared at high school students aptly called the High School Financial Literacy Program and cashcourse.org for adults.

 

 

As for budget tools, there are also a lot of free online resources like mint, Personal Capital, and of course everydollar.com.

 

Making informed decisions, setting goals to pay down debt, invest for retirement and the future, or just to make a big purchase down the road; by tracking your pay, spending, and saving will not only ensure your family’s peace of mind but will also contribute to your own personal well being.

 

 

 

HAVE A PLAN – TO STAY HEALTHY

 

When I first decided to get serious about my financial health, I also looked intently and also considered my physical health.

 

My motivation in my journey to financial freedom was not only to be debt free but to also be able to spend quality time on having rich experiences with my family down the road; which cannot happen if I’m weighed down by physical or health issues.

 

I weighed 204 lbs when I started getting serious with our financial journey and that same week, Moira got us our very first gym membership which we never had our entire adult lives.  We figured we have to do this to ensure we’d be in the best shape to enjoy our future.

 

Fast forward 5 months, I’m down to 178 lbs with Moira also doing well having lost at least 8 lbs and maintaining,  all because we made it a goal to be able to be physically and financially free.

 

A recent study conducted by the United Health Foundation found that ‘current and future retirees with retirement savings of $20,000 or less are more likely to be poor in health, have chronic disease , and have lower incomes than those with higher rates of retirement savings”.  Duhhh…. It’s clear to see that the study most notably identifies ‘lower income’ households, who tend to not eat healthier and have poor dietary habits; who eventually end up being a burden to their families and society as a whole.

 

This shouldn’t be if we’re responsible, and want it bad enough; we should be able to discipline ourselves into being and staying healthy not only for us but for our families.

 

I know it’s easier said than done but like I said, we have to be mad enough, be brave enough, and be smart enough to say enough is enough!

 

We’re not going to live our lives being bound by circumstances we can’t’ control, paying attention to people and things that shouldn’t  matter to us, trying to fit into a societal mold that will never result in peace and inner contentment.

 

We need to take control, not only for us, but for our family’s future!!!

 

Do you have other tips that can help us provide peace of mind for our family? Won’t you drop us a line by commenting below or sending us an email @ thedebtfreejourney(at)gmail.com.

 

Peace and Blessings to you All.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.