4 simple ways to ensure your family is protected (in case something ever happened to you)

4 simple ways to ensure your family is protected (in case something ever happened to you)

Murphy’s law suggests that if we have insurance, we probably won’t need to use it. It seems like we spend all of that money and never need to use it. That is a good thing though. We don’t want to get caught out. We don’t want to be underinsured or not insured at all.

We are often good at insuring our cars, house and contents, holidays and our health. It’s what is expected of us. It is a habit.

What about protecting you in case of an accident, serious illness, disability or death? It’s not nice to think about. It’s not a nice subject. We don’t normally talk about it. It’s not a great conversation starter (in my opinion anyway). It’s depressing and boring and not at the forefront of our minds.

However, what if something happened to you, today? What if you were no longer able to go to work and provide for your family? Who would get your assets? Who would care for your children? How would the rent or mortgage be paid? How would you afford school fees? How would the bills be paid?

Here are four simple ways to protect your family:

1. Create a will.

Many people do not have a will in place. It is not something people talk about nor something that we think about. Not having a will can make things very challenging for those that are left behind in the case of an untimely or unexpected death.

Dividing assets can become complicated, as can the guardianship of orphaned children. We did this at our local lawyers office. We put in place plans for our money and care of our children if something were to happen to us. We also put plans in writing to protect our spouse if they were widowed.

Regardless of age, it’s a good thing to sort out sooner rather than later as we really don’t know what’s around the corner. It cost less than $500 for peace of mind and was a very straight forward process. Willpro offer an online alternative. It’s completely legit and done by a lawyer for only $99 and couples less than $200 (moneysavvymamma readers get a discount when you mention my name).

2. Have an emergency fund.

Having money aside for when you need it is important. For many people, if they had a large expense pop up they would not have the funds to cover it. They are forced to ask for help from family, take our a loan or open a credit card. It’s not ideal and can prove quite stressful.

Ideally, it is a good idea to save up between 3-6 months of expenses. This money should be easily accessible, ie not in shares or in a term deposit. Consider if you were to lose your job tomorrow or be unable to work due to illness. Would you have any leave you could use or cash out? How much in savings do you have to cover rent or the mortgage? How long could you ‘survive’ until things got really bad?

This emergency fund does not have to equate to months of income, but rather necessary expenses you would have to cover (housing, groceries, utilities, car running costs, insurance etc). It can be a daunting process, especially if you are on a low wage. Start putting money aside each pay and set a goal to achieve this by.

3. Make sure you have income protection.

Income protection ensures that if you are unable to work, you will still continue to get paid. This could be for a sudden illness, accident, injury or disability. Knowing that you will be ok and your bills will be taken care of can be a huge weight off your mind.

When choosing what type and how much to sign up for, there is normally a waiting period. This is when it is imperative to have an emergency fund in place to help cover you in the interim. Income protection can be setup through superannuation (Australia’s version of retirement) or purchased separately.

Going through super can be an easier and cheaper option, but doesn’t always cover that much. Make sure to read the fine print to check that you’ll be covered enough. Applying separately can involve much paperwork, cost a higher amount and come out of your take home pay. However, if you need to access money, it might pay out more. Do your research and don’t be afraid to ask an expert for help.

4. Apply for death and total and permanent disability insurance (TPD).

Whilst we don’t ever want to access this type of insurance, it is extremely important. In the unlikely event of your early death, this can provide some comfort to your family members knowing that some key financial areas will be taken care of.

I suggest increasing the payout figure to a number that would easily pay for a funeral, pay off the mortgage, and provide enough money so the remaining spouse can stay home with the kids (and not have to worry about work). It is another insurance that you have to pay for (directly or indirectly) but it is one that you need to have in place. It is crucial that both spouses have this cover, not just the one heading out to work.

These four things are a starting point to give you peace of mind, especially during these uncertain times. It is worth taking some time to consider these questions. If not now, block out some time in your calendar or put a reminder in your phone. Make thinking about, talking about and actioning this a priority.

As always, make sure you get the right advice that is specific to your financial and family situation.

Do you need to organise one of these?

[Disclaimer: I’m not trained in finance so don’t take it from me. Feel free to grab ideas from this post but always see a professional for advice that is relevant and personal to your situation.]

5 common money myths busted

common myths about money busted

I am writing today about the 5 common money myths. I often hear things said about money that simply aren’t true. Managing finances does not have to be complicated. We tend make it out to be far more difficult than it actually is. I am here to set the record straight on the five common myths about money.

Myth #1. I need to earn a lot to save a lot.

I hear this money myth a lot. You can save money regardless of how much you earn. Open a savings account or multiple ones if you can. Have money transferred automatically to these accounts every time you get paid. Every time you get a pay rise or come into more money, increase your savings rate.

I would recommend you set up a spending account each for you and your spouse. This gives you the freedom to spend it on what you like and allows some financial independence in your relationship. For me personally, we have $35 a fortnight go into my hubby and my account. It’s not a huge amount but it does grow over time. When I get payouts from Cash Rewards and ShopBack from referrals and cash back, I opt to transfer this into my spending account or top up the mortgage.

Pay more to your debt or mortgage than what you are required to (ie above the minimum repayments). Even small amounts extra will add up. You’ll get used to paying more, that soon it will feel normal.

Work hard to build up an emergency savings fund which you can tap into if and when you need to. This takes away the need for credit cards and personal loans. Chances are, if you have money aside, you probably won’t have to use it (Murphy’s law and all). Set yourself an initial goal of $1000, then $2000, $5000, $10,000 and then 3-6 months of expenses to keep you going in case you weren’t able to work. It’s a big amount but you can get there if you keep chipping away at it.

Myth #2. I need to be rich before I can be generous.

This money myth is common and to me, it sounds like an excuse. While yes, you might be able to afford to give more away later, you can start with what you have right now.

Practice being generous with little so you won’t find it hard to be generous with much. If you can’t part with $10 when you earn $100 a week, you’ll find giving $100 or $1000 away tough. Everyone can be generous in some way, even if it is a tiny amount of money and giving more of your time.

Perhaps you could sponsor a child from a developing country. You could write letters as well as contributing financially to build relationship with them. Alternatively you could support a child closer to home by helping them with school supplies, uniforms and fees. You could donate or volunteer at a school breakfast program or soup kitchen. Give money to a homeless shelter or animal rescue.

Marantha Health is a not for profit in Uganda helping to improve health outcomes, and they can always do with more support. Catherine Hamlin Fistula Foundation is another charity close to my heart. They help to save women suffering with preventable childbirth injuries.

Find the thing that makes you tick, makes your heart break or motivates you into action, and give what you can to it. Get in the habit of giving something in whatever season you are in, and increase the amount when you can. Generosity feels good and is good for us! Like gratitude, it is good for our health to practice and enormously benefits those who need it most.

Myth #3. Mortgages last for thirty years.

A big money myth is that mortgages need to last for 30 years. You can pay it off sooner! Change your mindset. Read books, follow inspiring people, listen to motivating podcasts. Get your partner on board and make a plan. I’m most passionate about this myth!

Find a mortgage broker who can help you find the deal best for you (and who understands all the confusing stuff). Look for the lowest interest rate, low fees, perks like offset accounts and the ability to make higher repayments without limits.

Ring up your bank and ask what they can do for you. Question whether they are offering you the best rate on your mortgage. If they play hard ball, threaten to go somewhere else, and follow through if they don’t seem to care (they often find a better deal if they think they will really lose too).

Make weekly or fortnightly repayments on your mortgage Pay more than the minimum. Throw extra at it when you can- tax returns, bonuses, payrises, side hustles, selling unwanted items from your house. Hustle hard and bank the earnings. Just imagine owning your house outright and the money it would free up each pay!

Myth #4. Kids are expensive.

The money myth that kids are expensive is not necessarily true. As parents, you choose how you raise them. I do cloth nappies and wipes, hand me downs, free gear from my local MOPS groups, op shopping, etc. Put your younger kids in the clothes that their older siblings wore. Do free things with them and limit scheduled activities. Let them share a room. Enrol in public school. Buy second hand toys or utilise the toy library.

Spend more time with them, rather than taking them places or buying them things. They just want your full attention and love. Choose experiences that create wonderful memories together.

My toddler loves pushing a little trolley at Bunnings, exploring the creek and sitting out the front watching the rubbish truck come. We don’t have to make it complicated.

As they get older, limit their extracurricular sporting activities, musical tuition and hobbies. They don’t have to go to every single birthday party that they are invited to. Set a budget for presents and stick to it. Buy generic gifts on sale or clearance and put them aside in a gift cupboard. Don’t invite the whole class to a party, instead let your child pick a few choice friends. Alternate a party year with a sleepover year with one close friend. You choose how busy and expensive your children’s life will be.

Myth #5. I don’t need to worry about retirement yet.

It is a big money myth that you don’t need to worry about retirement yet. It’s never too early to plan for retirement. In fact, compound interest is your friend! Start contributing more per pay. Gradually increase this every year or whenever you receive a pay rise.

Put your tax return onto your retirement in a lump sum. If your partner is not working while they raise children, consider putting money into their superannuation every year to claim at tax time and to help them catch up.

Ensure that your family is protected in case you have an accident or health issue. There are 4 things you can do to sleep better at night.

If you can learn to live on a little less now, you can live on a little more later. I for one don’t want to end up retired and broke, worrying about money, unable to have independence or choices or travel. I plan to live in a paid off house, with plenty of super to draw on, and dividends from shares to access. Figure out how you want to live in the future and work backwards with what you need to do to make that happen.

Have you heard any of these statements before? Did you believe them?

I challenge you to dare to do things differently. Go against the grain of our spend now, worry later culture. Be responsible and wise with your money, reduce your spending and live within your means. Surround yourself with like minded people. Feed your mind the good stuff to stay on track. Set high goals and work hard to achieve them.

You’ll thank yourself later.