Top 5 Financial Safety Nets
Are you confident that you and your family can ride out a wave of disaster or misfortune in the future? Do you have the financial means necessary to cover surprise expenses or pay your bills if you aren't able to work?
That's the importance of having safety nets in place. Financial safety nets will catch you when you fall, and support your family in the case of an emergency.
There are many different types of nets you can invest in for financial security and peace of mind. And while everyone's situation, family structure, and goals are different, there are a few common financial security tips to follow.
Wondering how to be more financially secure? Wondering what five safety nets you need to have in place as soon as possible? Keep reading to find out how to protect your family's future.
1. Life Insurance
When it comes to financial safety nets for your family, none are more important than life insurance. While nobody wants to talk about it, the reality is that you never know what is going to happen. Regardless of your current health, your income level, or your optimism for the future, disaster can strike at any time.
Unfortunately, your bills and debt don't disappear after you die. Your family will need income in order to maintain their quality of life.
The best thing you can do to secure your family's finances for the future in case you pass away is with life insurance. Here's how you can tell if you need a life insurance policy.
Do you have any kids, dependents, or a spouse who would struggle financially if you were to die? Would they struggle to come up with enough income to continue paying their bills, such as the mortgage, health insurance, and debt payments? Would they have a hard time buying enough groceries to keep going?
If the answer is yes, you need life insurance. Should you die unexpectedly, and your family loses all or a large portion of their monthly income, life insurance can support them.
Or, if your spouse has to start working and needs to pay for daycare and other household expenses, life insurance can cover that as well.
With multiple different policies available, Vantis Life is here to help you secure your family's future. Get peace of mind today knowing that whatever happens in the future, your family will be provided for.
2. Emergency Fund
The next safety net you need to focus on is stocking up an emergency fund. Have you ever had an unexpected expense that you didn't have the money to pay for? Maybe your car broke down and needed expensive repairs, or you had to go to the hospital and left with expensive medical bills.
Without an emergency fund in place, you might have to resort to high-interest credit cards. In fact, the average credit card interest rate is between 15 and 23 percent. That's a lot of interest you're going to have to pay.
Or maybe you just push off the bills, hoping they go away. But if you do that, you risk having your debts sent to a collection agency. When this happens, you now have professional debt collectors after you, trying to get you to pay.
It's incredibly stressful. But it will also be reported to credit bureaus, which will negatively affect your credit score. These marks on your report can last for years and may prevent you from opening new loans, such as a mortgage or auto loan.
That's why it's vital to have an emergency fund in place. At a minimum, you'd want to have at least $1,000 set aside in a separate savings account, so you won't be tempted to use it.
A better option is to have three to six months' worth of income saved up and set aside. That way, if you were to lose your job or be unable to work for a period of time, you have enough money to get by without losing your home and racking up debt
3. Disability Insurance
Having a long-term disability insurance policy can protect you if you become ill and unable to work for a period of time. Even if you have an emergency fund in place, it's ideal to have a disability insurance policy in place so that you don't have to wipe out your savings when you are too sick to work.
Even though experiencing a disability is more common in older people, it can happen to anyone, at any age. Car accidents and sporting injuries are common for younger workers.
And you never know how long you may be unable to work. It might be a few weeks, but it could also be a year or longer. Even if you have an emergency fund, it might not be nearly enough.
If you’re lucky, your employer may offer a sponsored disability insurance plan. Even if they don't, consider this an essential safety net to invest in as soon as possible.
4. Retirement Accounts
Everyone wants to retire as soon as possible. But most people aren't on track to do so. In fact, almost half of American households have no money set aside for retirement.
While retirement accounts won't protect you in the present, they are safety nets for your future. If you have goals for retiring, such as traveling, spending time with your grandkids, or taking up new hobbies, it's vital that you have enough saved up before retirement age.
Many different types of tax-advantaged retirement accounts are available depending on your employment status and income level. Those who want to prioritize financial security should maximize contributions to these accounts every year.
5. Living Debt Free
Did you know that the average American has over $90,000 in debt? Everything from your mortgage and auto loan, to student loans and credit cards, adds up. And with rising interest rates, these monthly payments are a major burden on most households.
One of the greatest safety nets to work towards and protect is becoming debt-free. Imagine how much money you could save each month if you didn't have to pay back any of your current loan balances.
Few things in life come with the peace of mind of being debt-free. Do your best to set a budget, lower your monthly expenses, and earn extra income to become debt-free as soon as possible.
Start Building Your Financial Safety Nets Today
When it comes to financial security, it's important to start building today. Considering that disaster or disability can strike at any time, you need to have safety nets in place ahead of time.
Of course, you hope to never have to tap into these resources. But if you need to, you'll be extremely glad you have them in place.
Don’t forget to secure your family's future. Get a free Vantis Life quote today for security in the future and peace of mind in the present.
Our content is created for educational purposes only. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Vantis Life encourages individuals to seek advice from their own investment or tax advisor or legal counsel.