If you’re like most people, you are probably missing one crucial aspect of protecting your family. A recent survey showed that 62 percent of American have less than $1,000 in their bank accounts. More than 20 percent don’t have any savings at all. If you fall into one of the above groups, your family could end up drowning in debt in the event of an emergency. However, you can protect your finances if you take the right steps.
Set Up an Emergency Fund
Most people who don’t have an emergency fund don’t have one because they live paycheck to paycheck, but even the smallest amount saved will help in the future. Ideally, you will have at least six months of expenses saved up, but if you can’t build toward that, start small. Focus on saving for one month, then two, and so on. You can do this either by saving a set amount per paycheck—even if it’s just $5—or by having your employer automatically send a specific amount to your savings account so you’ll be less tempted to spend it elsewhere.
Cut Out the Excess
Think about your family’s spending habits. How often do you eat out or stop at the grocery store for convenience food? Are you spending money on premium cable, Netflix, and Hulu? Do the kids have premium accounts for their gaming consoles? How much money do you spend on your weekend outings? You can save on all of this.
Cut out the cable. Spend one day each week meal planning, grocery shopping, and prepping things you can freeze and stick in the oven or crockpot later in the week. Get rid of the premium gaming accounts or have the kids pay for them by doing odd jobs. Do you go to certain places often? See if they offer a seasonal or yearly pass—a larger investment that will save money in the long run. On the other hand, if you pay for a yearly pass to an attraction you only end up visiting once or twice per year, paying out of pocket for individual visits may be cheaper.
Pay Off Debt
Paying off debt now will give you more money to put into savings later—plus, it will keep your spouse or adult children from having to take on the debt themselves in the event that something happens to you. Some people choose to pay off debt with the highest interest rates first, but others feel more accomplished by paying off all smaller debts before working on the largest. Choose what works for you.
This cannot be said enough. Not purchasing insurance is not saving money. It’s costing you your future. In addition to health insurance—a requirement in the United States—you should have home insurance, auto insurance, life insurance, and disability insurance. Ensure home coverage includes fire, flood, and other natural disasters because most policies are not all-encompassing. Don’t skip disability or life insurance. Both are very affordable through a Raleigh insurance agent, and both will save your family from financial ruins should something happen to you.
By cutting back on unnecessary expenses in favor of paying off debt, creating an emergency fund, and purchasing the correct insurance policies, you are ensuring your family is safe and financially stable even when the unexpected occurs. Remember, starting small is better than not starting at all.