How can I financially protect my children?
Having a child and expanding your family is a big deal. You are no longer just responsible for yourself, you have people who rely on you for many things. Emotional support and love, food, and just generally staying alive. And like all things, the majority of caring for someone costs money.
There are 5 major things that you can do now to ensure your children are financially protected.
Get yourself a Will – If you don’t have one yet, well having children should definitely be the catalyst to get it sorted. If you do have one, you need to update it to include your brood. Your Will should outline who gets your assets, but it will also outlines who will be looking after your children should something happen to you. You need to consider who the best person would be, and whether you intend on making financial provision for that person in your Will to help with the cost of raising your children.
Power of attorney – When completing your Will, you may as well do a Power of Attorney as well. When appointing a Power of Attorney, you are giving someone authority to make important financial decisions on your behalf if you were to lose mental capacity.
Have an emergency fund – Whether you have children or not, having an emergency fund set up is always a good idea, but even more so when you have little people relying on you. The minimum I aim for is 3 months’ worth of house hold expenses as a cash buffer.
Pay more off your mortgage – The majority of people need a home loan in order to get a place of their own. There is no need however to take the full 30 years to pay it off. If you have excess cash, then pay more off your home loan and get that thing done and dusted sooner. If you have an offset account attached to your mortgage it’s even easier than ever. An offset account is a cash hub attached to your home loan, and whatever is in there reduces the interest you pay. It is also accessible within a day or two so it is a good place to keep that emergency fund cash we talked about above.
Make sure you have enough life insurance to cover them – If something were to happen to you, who would look after your children? Would they have enough money to provide the life that you wanted for them? Life insurance is a lump sum payable upon death. If something happens to you, this amount of money will go a long way to protecting your children and ensuring they will be looked after financially if something were to happen to you.
Having a child catapults you to real adult status quick smart. You need to make sure you have all of your ducks in a row to financially look after the little ones. If you do the above 4 things, you will be well on your way.
The post is from our resident Financial Planner Cara Brett, check out her details in the About Us section.