5 ways to create financial peace of mind and security for your family
Take these steps to prepare for the future and put you and your family on the right financial path.
By Gemma Wilcock | Last updated Mar 21, 2022
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From the moment our children are born, we want to keep them safe. We want our loved ones to be healthy, happy and have everything they need - and a big part of that is making sure we can provide for them financially.
Financial security will be different for everyone depending on their job, earnings and circumstances, but it can mean having the funds to pay for the things your family needs and wants, and not having to worry about what will happen if you or your partner can’t work or are no longer around.
If there’s one thing we’ve learnt in the last two years is that life is uncertain. Things can change at any time, so it’s never too late to make sure you’re on the right financial path.
We searched the Mumsnet forums to find out what steps parents have taken to secure their family’s finances. We also looked at financial websites to see what the experts advise and ended up with a list of tried-and-tested tips.
Here are five steps for getting financial peace of mind for you and your family.
1. Get life insurance
“We've got mortgage life insurance. I've got a personal policy that runs out in three years time. And DH has a company death-in-service policy. To me it's essential if you have children. DH couldn't survive financially had I died when DS was younger even with [the] house paid off.” NeverForgetYourDreams
One of the best ways to ensure long-term financial security for your family is through life insurance. Thinking about your future now will provide peace of mind knowing that your loved ones are taken care of when you’re not able to do so yourself.
It’s not something any of us like thinking about, but investing in life insurance will provide financial support and comfort to your family if you get seriously ill or die. This money could be used to pay off a mortgage, cover funeral costs or pay the bills and care for your family during a difficult time in their lives.
With so many different policies around, buying life protection can feel overwhelming, but it’s actually really easy. You can chat to your bank or a financial advisor who will advise you on which cover is best for you.
While the cost of life insurance varies depending on your personal circumstances and how much cover you need, you’ll be able to find a policy that suits your budget and needs, and you can usually get a quote online in minutes.
Once you’ve set up your plan, you can sit back, relax and enjoy life knowing you have taken a huge step in ensuring your family has a secure future, no matter what.
2. Track your bills
“I have an enormous spreadsheet where I track and categorise all my expenditure as well as forecast future months. I get quite excited when I update it. In my defence I work in finance.” Sprockerdilerock
From TV packages to monthly subscription boxes, you can easily lose track of where your money is going and how much you have left over each month.
This can cause a lot of stress and worry so organising all your monthly outgoings into one place can help you keep track of it all. This could be on a spreadsheet, noting down all your bills, what you owe and the payment date. There are also apps for this, and some bank accounts can track your bills so you can see how much is still left to pay each month.
Make sure to update your outgoings when payments change and, if your energy bills or credit cards are up for renewal, check that you’re still getting the best offer. Comparison websites are really helpful for this as they can cross-check your current deal against others on the market.
3. Clear your debts
“If you can't consolidate, I would honestly go with the snowball method. You pay minimum payments only on everything but the smallest debt and then hit that one with every bit of spare cash you have. Before you know it, that one will be cleared quickly, then you move to the next one and then the next one in order. It’s psychologically satisfying seeing them getting knocked off so it keeps you motivated. I'm on my last one now and it's a great feeling!” Milkysmum
Paying off debts can be a long journey, but taking steps now will give you peace of mind that you're heading towards better financial security in the long-term.
Citizens Advice advises making sure you can pay your priority debts first. These are things like your mortgage, rent, energy bills and council tax that could lead to you losing your home and access to essentials or ending up in prison if you can’t pay.
Have a look at your monthly outgoings after you’ve paid these and work out how much you have left to pay off your non-priority debts, such as credit cards. If you’re struggling, you can contact your creditors to ask to lower the payments.
If you have various loans and credit cards, you could try consolidating your debts to reduce your payments or try the debt snowball (as recommended by our Mumsnetter above) in which you work through each debt, paying off the smallest first, making only the minimum payments on the others. The debt avalanche is another method which pays off the debts with highest interest rates first.
4. Save for emergencies
“Don’t underestimate the security of having enough money to cover most eventualities. Knowing you can pay for something if you need it is 10 times better than buying something just because you want it.” ConsuelaHammock
If your boiler has ever packed up in the middle of December, then you know that these things often happen at the worst time. A hefty bill like this can be a disaster if you have no way of paying for it.
Financial experts recommend saving money into an emergency fund. These savings can prevent you from having to borrow money to pay for large, unexpected bills or cover your outgoings if you lose your job.
It’s recommended that you have at least three months’ worth of living expenses put away. This may take a while to save, but even having a small pot of savings is better than none.
If you have a partner, discuss what you class as an emergency - this could include job loss, medical emergencies and car/house repairs - so there’s no confusion. It’s best to open a separate savings account so you’re not tempted to dip into it for non-emergencies.
5. Speak to a professional
“[Institute of Financial Accountants] IFA is a good idea. We went through everything with [an accountant] initially over 20 years ago, with the upshot being that I am semi-retired at 55, having gone part-time and taking my pension early, and DH will do the same in a couple of years. Life is easy, we will never be millionaires, but we can live a comfortable life with a good balance. All due to £1,200 spent on blooming good advice.” BeyondMyWits
If you want to look at your overall finances, a financial advisor can help you draw up plans, recommend investments and take the confusion out of money matters.
This could be a professional at a bank or an independent financial advisor. This can be really helpful when planning for retirement as your advisor can look at how much you need to be putting into your pension and the kind of investments that are best for you.
A financial advisor can also look at other insurances, such as income protection which covers you when you get ill and you can’t work. The future may feel like a long time away but investing in yourself now can help you and your family feel more secure, whatever happens.