It’s all too easy to get caught up in the here and now of life with a family, particularly when that family is made up of dependents who zap time, energy and money. However, take a moment to think ahead to the future and what you hope for those very same individuals, and you’ll realise that you need to start planning the ways to secure your family’s financial future.
When it comes to securing your family’s financial future, planning is crucial. When things are just left to happen or pan out, you’re unlikely to be taking the most financially savvy route. So what are the key ways to secure your family’s financial future?
Think of Yourself First
Contrary to what you might think, the most important way to protect the financial future of your family is to prioritise your needs first. This means reducing debt (including mortgages) and planning for your own retirement. If you don’t, these shortfalls will fall to your loved ones. Additionally, the amount you lose in interest on debts is unlikely to be matched in terms of any interest you make on savings, in the current financial climate.
Set Clear Financial Goals
Take some time to look at your current financial situation (including not only your income but also your assets, your debt, and your living expenses) and compare it with what you hope for your family’s future. Look at where you are now and where you want to be; is there a certain amount you want to save for your children’s future? Set a goal and consider how you plan to get there.
Think About Your Estate
One of the single biggest ways you can protect your family’s financial future is to be future-thinking with your estate. You can leave behind an estate worth £325k before having to pay Inheritance Tax (IHT) at 40%. However, if you are married or have a civil partner, then you can gift the same amount to them and create a total estate of £650k before IHT that would be payable. Also, bear in mind that IHT tax allowances are gradually being increased to £500k per person[1]
Don’t forget that you can also gift individuals up to £3k per tax year without being liable for tax. Furthermore, assets and sums held in trust don’t count as part of your estate for IHT purposes.
Be Savings Savvy
Once you’ve got debts cleared, and a clear head on IHT rules, then you are in a position to start saving. It may make sense to save for your children or grandchildren in a tax-efficient Junior ISA to put the money in their names rather than as part of your estate.
Protect Your Income and Home
When planning for your family’s financial future it is imperative to protect your income and home in case anything happens, such as illness, injury, or premature death, that could jeopardise your family’s financial wellbeing. It is crucial to consider mortgage or rent protection, income protection, life insurance, and critical illness cover. Shepherds Friendly can bring you Income Protection which is recommended by over 90% of our members.
Make a Will
A staggering two thirds of adults in Britain don’t have a will according to a YouGov survey [2]. If you die intestate, this potentially puts your loved ones in a precarious position whereby the amount they receive, and the timescale the receive it, is determined by rules outside of their and your control. If you want to make things easier for those you will leave behind, and ensure their future is financially secure, you must draw up a will.
Planning ways to secure your family’s financial future is crucial, it cannot be left to chance. Take a little time and thought to get your affairs in order, start earlier rather than later, and have the peace of mind that your family’s financial future is both safe and secure. Don’t put it off, make the first steps today.
Sources:
[1] http://www.telegraph.co.uk/money/planning-for-the-future/how-to-secure-familys-financial-future/).
[2] http://www.bbc.co.uk/news/uk-36325871
