Protecting Your Family’s Finances From The Great Beyond

We all want to ensure that we manage our money so that we can provide for our families. We want to know that thanks to our prudent investments, thrifty everyday savings and sensible money management, they’ll be able to enjoy the best possible quality of life.

As hard as we work to ensure the wellbeing of our children, however, we also understand the potential pitfalls of spoiling them. We understand that the world will not give them handouts and neither should we. That’s why we do our best to raise them to appreciate the value of money. We guard against not just our own frivolous spending but that of the whole family unit.

We save what we can where we can, we earn a little extra on the side where we can and we’re ever vigilant of the best ways to grow our savings to ensure that we squeeze as much value out of every penny we have as we can. We put a whole lot of thought, effort and planning into it, but we’ve pretty much got our household finances locked down.

But what happens when we’re no longer around to look after our family’s finances? What happens when old age, illness or accident prevent you from being able to shepherd your family towards making the right financial decisions? We want the peace of mind of knowing that our spouses and kids will be well looked after when we can no longer bear the responsibility of looking after them. Of course, this means that we make the right decisions today to protect them from threats to their financial well-being tomorrow.

Lay the foundations for financial freedom

One of the greatest legacies you can leave behind is a knowledge of how your children can best manage their own money in adulthood. Even if you’re able to leave them a large lump sum upon your passing, this is finite. Teach them to better manage their finances, however, and you need never worry about them falling afoul of financial misfortune. It’s never too early or too late to start teaching your kids the value of financial responsibility.

Young children can be encouraged to think about money and finances as young as 4 or 5. Before the age of 10 your kids should understand where money comes from, that it’s finite and that it must be carefully managed for the good of your family (and that you’re not holding out on the things they want because you’re punishing them for existing). Use cash in front of them where possible to give them an understanding of how spending works, tapping a debit card on a contactless screen is unlikely to give them a healthy understanding of how money works.

If you give your kids an allowance, encourage them to save it, rather than spending it all on candy, stickers and other disposable ephemera as soon as they get it just because they can. Encourage them to think about the things they really want from a new bike or games console to clothes and shoes, and then help them to realize how easily they can afford these things if they save. You can even match their contributions if you feel that they will need an extra incentive. It’s a pretty good way to teach them about pensions, too!

Detail your funeral wishes

Does the thought of your surviving relatives blowing a fortune on an expensive pine box to lay you to rest in keep you up at night? Do you hate the thought of your passing carrying unwanted and unnecessary expense for your family out of a sense of duty and respect for your memory. While the sentiment may be noble, it’s more important to make the most of the time you have together now. Detailing your wishes for how you want your funeral to go (including imposing a maximum spend) is a great way of insulating your family from excessive funeral costs.

Lots of people arrange their own plaque, a plot of land or cremation options even in middle age to ensure that their families won’t have to make any tough or expensive decisions while grieving and vulnerable.

Protecting Your Family's Finances From The Great Beyond

Seek legal counsel

Matters of probate and estate litigation can be extremely complex and depend greatly on the state in which you live. While there are many “Do it yourself” kits to help you to make a will without incurring legal costs, a sharp financial mind will likely know a false economy when they see it. There’s really no excuse not to liaise with a specialist in probate and estate litigation. You can check out the website of Dave Burns for more information. This will help to ensure that your children get as much of your inheritance as possible while still complying with their tax obligations under probate law.

While nobody likes the jarring reminder of their own mortality that comes with making a will (perhaps this is why 64% of Americans die without making one), the damage that could be caused to your family’s finances if you die intestate is simply not worth the risk.

Give gifts

The thought of helping our family out by leaving money to them is comforting, but it comes with one sizeable problem… You don’t get to see them enjoy it. If you want to see your family enjoy the money you leave them while you’re still around to see it yet don’t want a chunk of it to be swallowed up by the IRS, remember that tax-free giving remains an option. You can gift up to $14,000 a year per individual without having to pay tax on a single penny.

It’s not just about life insurance, it’s about the right life insurance

Most people have some sort of life insurance policy in place to protect their family’s assets after they’re gone, yet few are aware that not all life insurance policies are created equal. Avoid buying a cheap policy as low premiums tend to result in low-quality cover. It’s also important to understand your needs. If you’ve managed your money well all your life you won’t likely need cover as comprehensive as someone whose adult life has been mired by debt.

Whatever you do don’t leave it too late. The earlier you start paying into your insurance policy, the cheaper your monthly payments will be and the better cover you’ll enjoy.

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