As a parent, your worst nightmare is not being around to see your children grow up. However, just because this frightening possibility is unlikely doesn’t mean you shouldn’t plan for it. When you make life planning decisions that account for worst-case scenarios, you can rest assured that your family will be cared for no matter what. Here are six things you need to do to safeguard your family’s future.
Start an Emergency Fund
An emergency fund is important for everyone, but especially so for families with children. Start building a savings account that can cover at least three months of expenses. Consider not only basic expenses like housing and groceries, but also medical expenses, lifestyle costs, and unavoidable expenditures like loan payments. And don’t stop at three months — a bigger emergency fund is better, and you can always invest some of it in a liquid fund to help it grow. Just remember that the emergency fund is just that. Do not take money out of it unless it is absolutely necessary. Having extra money sitting around has led many people to make very poor decisions that they later regret. Don’t let this happen to you.
Grow Your Business Career with an MBA
Whether you are looking for career advancement in your current job setting or want the skills needed to become a successful entrepreneur, an MBA is a logical next step for this type of training. Earning an MBA can provide financial stability that can allow you to plan for your family more effectively. It can also help to enrich your own prospects and grow your professional network on the way to finding your dream career.
Life insurance is a must for parents with young children. A good life insurance policy provides enough money to not only pay for medical and funeral expenses, but also cover day-to-day expenses, pay the mortgage, and sock away money for college. Most parents only need term life insurance, but a permanent life insurance policy may be a better choice for a family with special needs children who need ongoing parental support.
You’ll need to name beneficiaries for life insurance and retirement accounts, but the wrong choice could complicate your estate. The ideal beneficiary is a surviving spouse, but you’ll need a contingency plan in case both parents pass away or if you’re a single parent.
Since life insurance or retirement benefits can’t be paid to minor children, you should set up a trust for your children and name the trust as your beneficiary. Appoint a trustee to manage the funds according to instructions you provide.
Write a Will
When you have children, a will becomes more important than ever before. Wills not only dictate the distribution of your estate, they also ensure your children will be cared for in the event of your death. Without a will, the state will handle your estate including appointing a guardian for minor children.
When preparing your will, list all the physical and financial assets you’d like to distribute, decide who inherits what, and name an executor to handle the distribution. A will should also specify funeral arrangements, healthcare directives, and guardianship of your children.
Name a Guardian
When writing your will, it’s incredibly important to appoint a guardian for minor children. The best guardian shares your parenting values, has adequate financial resources, and is healthy enough to care for your children until adulthood. Always name a second and third choice for guardianship, and specify family members you wish to have excluded. If your desired guardians are unable to care for your children, you don’t want the wrong person ending up with custody.
You may want to name a separate person to handle your children’s finances. That way, you can choose the guardian who best represents your parenting values, rather than making a decision based on financial capability.
Protecting your children’s futures is a legal and financial process that can be overwhelming for many parents. However, planning for the possibility of your family’s life without you is necessary, and one of the greatest gifts you can give your children. To make sure you do it the right way, work with a life planner and a legal professional to make sure your family is prepared for anything life throws at you.
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Laura Pearson is passionate about teaching the younger generation. Edutude was built to share resources on how to keep children engaged and in love with learning.
Thank you to our guest writer, Laura.
Have a beautifully imperfect day.