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Protecting your family can take many forms, whether that is planning for the very worst or setting aside some money for your loved ones to go to university or buy their first home.
Here are some of the key areas you should consider first:
Writing a will
No one likes to think about what happens after they die but having a will can make a big difference to the lives of the loved ones you leave behind.
They help you set out clearly what should happen to your estate, as well as your wishes on how your children could be looked after.
What happens if you don’t have a will?
You have less control over what happens to your belongings when you die.
Rather than you deciding who inherits your property and other assets, if you die intestate (with no will) the law decides for you. For example:
Writing a will gives you much more freedom to choose what happens to your belongings and make it clear who should look after any young children you have.
Is a will alone enough?
While a will is crucial for making arrangements for when you pass away, if you need a loved one to be able to make decisions for you while you’re still alive for any reason they’re not much help.
For example, if you had a nasty car accident and become incapacitated, a will wouldn’t give your loved ones the authority to make decisions on your behalf if you become unable to do so.
This is where a Lasting Power of Attorney (LPA) can prove invaluable, and gives control of your care and estate to a loved one, rather than the government.
Plus, with more of us living longer, the number of people who need care in their old age is also steadily increasing.
While that may seem a while away right now, having an LPA can make organising care much easier for your family. Without one, registering for control of a loved one’s affairs can be very time consuming and expensive.
Protection insurance policies
The right protection insurance policy can offer a valuable financial safety net should you fall ill or pass away, but it’s important to choose the right option for your circumstances or it can end up being money wasted.
For example, if you’re self-employed or a company director, the right protection policy could help replace some of the benefits many employees have included in their contracts as standard.
There are several ways you can protect your family financially, some of the most common types of insurance options are:
The right choice will depend on your personal circumstances, so it’s always best to get expert guidance before taking out any protection policy.
They can help identify the financial areas that could be at greatest risk if something were to go wrong, for example paying your mortgage each month or caring for your children, and recommend suitable options to mitigate that risk as much as possible.
Planning for the future
There are plenty of other practical steps you can take to plan for your financial future.
Paying off your debts
Borrowing money is costly, so anyway you can reduce your debts over time is likely to save you money.
Start with the debts that charge the most interest first, before moving on to lower cost borrowing.
If you have a mortgage, checking to see if you could move to a cheaper rate could also offer significant savings, especially if you’ve moved onto your lender’s standard variable rate.
Start saving
Saving a little each month is a great habit to get into, and the earlier you start the more interest you can earn over time.
If you’re a basic rate taxpayer, you’re also entitled to earn up to £1,000 in savings interest tax free each year through your personal savings allowance, giving you more choice how and where to save.
Before you start saving, think about what you’re saving for. Setting a goal can help you understand how much you need to save and determine the right savings account for your needs.
Once you know this look for an account that pays the highest interest rate, just watch out for accounts with temporary bonus rates that drop off after a set period of time.
You can find more savings tips on the Money Advice website.
Save money on your other bills
If you can spend less on your essential household bills, you’ll have more leftover to focus on some of the other options covered in this blog. Start by looking at your:
What’s next?
If you’d like to discuss your needs please contact Chris at Future Balance Finance, for a free, no obligation review.
You can also find out more about the different protection options covered in this blog by visiting the Money Advice Service or the Citizens Advice website.
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