Single mothers and single fathers need to plan for their financial security very carefully. Because there is only one parent, the parent has to give careful consideration as to how the children will consider their normal lifestyle, if something were to happen to the mother or father.
Because the single parent can only rely on one income, it is especially important to open an emergency fund to cover repairs on the automobile, emergency trips, and living expenses due to unforeseen events. This will help in time of need.
It is also important to designate a guardian in the event of the untimely death of the parent and to purchase life insurance to help cover the living expenses for the children. The addition of new family members could put an additional strain on the new family. A will would have to be created which would designate who the guardians will be. If guardians are not appointed, the state would designate someone who would be entrusted with custody of the children.
If the plan is for the children to go to college, the earlier the parent saves money toward this goal, the better. Since the children are relying on one income, parents can accumulate more money in interest if they start saving early. Additionally, there are state sponsored insurance plans available for the accumulation of college funding.
Some employers offer short-term and/or long term disability plans in the event of sickness or disease. However, the single parents should also consider a separate supplemental disability plan which would offer payments in addition to what the company offers. Often, the plan which is available at work is inadequate to continue paying for household expenses. One can secure a disability plan as a rider on some life insurance plans.
When purchasing health insurance at work, single parents should elect a plan with a low deductible and little or no copayments to protect the income. Since there is only one income, the single parent is more in need of a low deductible so that they can have the extra money for household expenses.
In conclusion, single parents need to be more responsible with their financial planning to ensure their families are protected in the event of emergencies and untimely death of the parent.
Often, people fail to accumulate money for retirement because they fail to develop a plan for saving money. It is important to budget the money that comes into a household by deciding how much will be saved before the money is spent on the necessities of running the house. George Clason mentions this concept in his book, The Richest Man in Babylon.
People often say they do not have enough money to save because of all their expenses. However, a careful review of the budget will reveal items which can be eliminated. People who fail to save often spend money on the wrong things, overindulge, or just waste money on things that they do not need. These items include junk food, cigarettes, alcohol, dining out in restaurants, clothing, and other items. insurance premiums should be part of the budget.
If we make a conscious effort to save first, before we spend, we will see what on our list needs to be eliminated. When we see the money accumulating in our accounts, we will look forward to saving more money. The first goal should be
to accumulate an emergency fund in the event that the car breaks down or the kids need new clothing, or someone in the family needs a loan, for example. The emergency fund should not be touched unless there is an extreme emergency and it should be in a separate account.
After saving the emergency fund, people can begin a savings plan for a new house, a new car, retirement, or college funding, depending on age and needs.
There are life events which should encourage families to consider buying life insurance. Unfortunately, life insurance is not a priority in the lives of many young families, as younger people tend to believe that they have many years ahead of them. However, the prudent thing to do would be to purchase life insurance to cover a loss of income in the event that something happens to one or both of the parents or if they become disabled.
They can purchase enough life insurance to cover college costs as well for the children. In the case of younger parents, life insurance is very inexpensive in the earlier years and parents would be able to afford to buy higher amounts of insurance coverage.
Newly weds should consider buying life insurance on themselves to protect their incomes in the event that something happens to them. If husband and wife are working, both can purchase life insurance on themselves. In this way, both can continue their normal lifestyles in the event of death or disability of the spouse.
When couples purchase a home, one thing that needs to be done is to purchase mortgage insurance to cover the mortgage in the event of death or disability of one of the partners. Many people suffered a loss of their properties during the economic crisis because they were not adequately insured. Some people may not be able to purchase enough to cover the entire mortgage, but any amount which they can afford would help their family.
When families experience financial hardship, the insurance is usually the first thing to go. Now, with the changes that insurance companies have enacted, families can continue their life insurance coverage in the event that the policyholder is disabled, unemployed, or when the family suffers a natural disaster.
In conclusion, families need to consider purchasing or increasing life insurance when they marry, purchase a home, or begin to have children, if they care about making sure they are protected in the event of death or disability. If you would like a review of your situation, feel free to contact me.