Family is a valuable asset and we care about it. So why is family financial protection so neglected?
Talking about the loss of loved ones is painful, we avoid doing that and prefer to live in the present. However, as the saying goes, “prevention is better than cure” .
But what is family financial protection? How it works? What are the risks of not planning financially? What is the best option to protect your family?
These and other questions will be explained here, for you who want to have a financial plan , organize your finances and start your family financial protection plan.
What is family financial protection?
In the day-to-day rush, we strive to maintain the family income, buy what is needed and have a quality of life. We have tasks and functions, we agree on a certain schedule, we adapt to different situations.
But we don’t always think about how we can protect our families in case of financial emergencies. Financial or health emergencies can happen at any time, and most people are not ready for a crisis .
If you want the best for your family, then you should think about a family financial protection project!
Family financial protection is like an extra income that can be used in case of lack of income from the family provider . In case of death or even an unexpected dismissal.
Being ready for the unexpected requires financial organization , finding amounts available in the budget to invest in this project and a lot of dialogue with family members.
How it works?
58% of Pakis are not dedicated to their own finances , that is, a large portion of the population lacks discipline and financial education . You don’t have to be part of that statistic.
The childhood habit of filling a piggy bank with coins is a good example to explain how this family financial protection system works. After breaking the safe, picking up the coins and buying something nice, it’s possible to realize that saving that money was worth it.
In that case, saving a portion of the income that can be used during an unexpected problem brings security and peace of mind. And why is thinking about it so important?
Whats the matter?
It is essential to talk about this protection strategy because when the financial crisis appears, all individuals in the family are affected, without exception.
A children’s story that can represent this situation very well and the importance of thinking about family financial protection is the fable “The Three Little Pigs”. Think of the piggies as three distinct families. Each managing their family budget as they see fit.
Now visualize each house:
– the straw one, without any concern for the future and living one day at a time;
– the wooden one, with some preventive measures, but which are not really effective;
– the brick house, firm and with good investments in the short, medium and long term.
Finally, after the passing of the unexpected event, which in this case is the Wolf, which house remained erect and safe? The one that was built with bricks, smart decisions and that despite the high cost, kept everyone safe and calm.
What are the risks of not having a family financial protection plan?
Let’s imagine the following situation: the family’s standard of living drops and debts start to appear. Credit card limits are used and accounts are gradually emptied. The children need to change schools and one of the cars will need to be sold.
That is, everyone is harmed by choices that were made thinking about the present and forgetting about the future.
In cases of illness, without health insurance and in need of specialized care, spending on medication and treatment can be high. Already in a retirement without money, the elderly person is totally dependent on other people or with an income far below what is necessary to live a comfortable life.
Even if nothing unforeseen happens, you have to think that your well-being and that of your family cannot be put to the test.
Family protection and investments
Family financial protection requires an emergency reserve . This investment needs to be low risk, as in fixed income applications . Liquidity needs to be high, i.e. you can redeem the money quickly.
