Financial planning is always important but there’s no doubting that the current economic climate does call for greater care when it comes to the family’s financial resources.
So where do you start when attempting to secure, as best as possible, the family’s financial future?
• Looking out for your dependents
• Protecting your income
• Planning for when you retire
• Saving for your kids education
Dependents must be a priority so they are not left high and dry in the event of the premature death of one of the breadwinners. Make sure you have life cover in place. If you live past the term period, your coverage ends, and you get nothing back. Term insurance is available for periods ranging from 1 year to 30 years or more. Mortgage and term insurance are designed to meet major debt commitments should either you or your partner die.
But what if you have to go on sick leave or give up work because of illness or disability? , Your employer may pay sick pay for a given period although there’s no obligation in law. It might be a good idea to look at income protection insurance. Cover clicks in once you’re out of work for more than three months, paying part of your normal monthly income up to retirement, if necessary.
There are essentially two critical periods in the average family’s life when the spending graph peaks way above normal spending patterns. Retirement is arguably the first of these that ought to be considered and planned for by way of a pension. Are you and your spouse or partner in an occupational or company pension plan? If so, well and good; if not, then the sooner you start a personal pension plan the better chance you’ll have of building up a fund capable of maintaining you both in a comfortable lifestyle after you retire and the monthly pay check has stopped. Besides replacing at least a part of your income after you retire, saving for a pension has another key benefit and that is the tax relief. It is now the most effective means of reducing your tax load during the working life.
The other period when there is an inordinate call on the family’s purse strings can be labelled ‘the gimme years’ – that period when the kids are at their most costly and preparing for college.
You may think that it’s a bit silly stashing aside money when education in this country is essentially free. However, do you know for certain that education will still be State subsidised in 15 years’ time? Moreover, maybe you’ll both wish to send the kids to private school, which can be very costly.
The best option is the start saving through capital guaranteed products like tailored unit-linked saving plan offered by a life insurance company; one that gives you managed exposure to the five key asset classes – equities, bonds, property, cash and currencies. Each company will have a wide choice of different funds and you can decide along with your broker which one to choose. In these unitised products, the funds are divided into ‘units’, which you buy, and the value of each unit depends directly on the underlying performance of the investment fund.
Getting the best advice is critical. Ultimately, how many of these boxes you tick will depend on your disposable income, but planning for the future is vital for the security of your family and your peace of mind.
Contact Gallivan Financial today by calling 064 66 37393.