The importance of worst case planning for your family

We never like to think the ‘worst’ could happen.

When and how the unexpected strikes is something we can’t predict, but the financial burden of unexpected events and even tragedies is the one aspect you can actually control and protect your family against.

There are three key elements to take care of in setting your family up for the ‘worst case’: 

Emergency Funds:

Emergency funds should be there as a financial back up to get your through the hiccups that can undo your very best efforts at keeping on top of your finances. 

From the events such as the hot water system blowing up, the need for emergency dental work to being unexpectedly let go from work and out of income for a short period of time, an emergency fund can have your back! 

You can set the parameters and rules around the use of an emergency fund, but it should be for genuine emergencies and not something to dip into if you accidentally overspent your budget last month.

If you’re starting from scratch, start with whatever you can, put some items you no longer need on facebook market place, or go on a spending detox for a couple of weeks to get some extra cash togher.  The key is to do whatever it takes to get some emergencies savings started.  From there you should set a goal to build between 3-6 months worth of you living expenses aside in this separate account.

Personal Insurances:

Life insurance shouldn’t be a dirty word.  We don’t seem to hesitate to insure our expensive possession (such as our iphones, cars and houses) but many of us are reluctant to insure ourselves. 

  • Imagine life without being able to earn an income. 
  • Imagine being diagnosed with a serious illness and needing treatment and time off work. 
  • Imagine the tragedy of losing your partner. 

How are you prepared to financially weather any of these experiences?   

Personal insurances provide a financial cushion in the event of the dreaded unexpected, and here are the 4 key personal insurances that everyone should consider:  

  • Income Protection – this cover replaces a large portion of your income if you can’t work due to accident, injury or illness
  • Trauma or Critical illness – this provides a lump sum amount that pays out in the event of a serious illnesses such as cancer, heart attack, stroke.
  • Total and Permanent Disability – this provides a lump sum if you are considered totally and permanently disabled.
  • Death cover – this leaves a lump sum behind for your loved ones that could cover the mortgage and provide a sum of money to support the family financially through the tragedy and beyond.

My heart breaks every time I see a go-fund me page set up, I’m sure you’ve seen these or personally know of someone who has suffered a serious illness, accident or tragedy.  The financial pressure and stress in these times can be huge. 

Estate Planning

Creating a Will and setting in place Powers of Attorney, as a starting point, should be on everyone’s to-do list.  And if you have a young family, high on your list should be appointing guardians to take care of your children in the tragic event that you are no longer here to care for them.

These are not decisions you should leave to family to decide, nor the legal system.  As difficult as this process can be to go through, you are the best equipped person to make these decisions.

If you’re a Mum, come and join us in the Savvy Mumma facebook community where we share lots of tips like this

MoneyMode Advice Pty Ltd (ABN 29 627 492 791) is a corporate authorised representative of Integrity Financial Planners Pty Ltd (AFSL 225051, ABN 71 069 537 855)

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This presentation provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Renae Vercoe
Founder of Money Mode, financial professional, passionate educator, partner, mum and financial freedom fighter!