Family · October 15, 2020

How Family Financial Planning Provides a Safety Net for Your Future

Family financial planning is one of the most important things you can do for your loved ones. Thinking long-term about your goals and creating a solid foundation will help your family grow your wealth and weather unexpected financial storms.

Save for the unexpected

An emergency savings fund is the foundation of a strong financial strategy. Whether you lose your job, your car breaks down or a pipe bursts in your house, life will happen—and you'll want money on hand to deal with it.

Beyond an emergency account, you may want to begin setting aside money for future needs based on your dependents. If you're concerned about your children's long-term financial stability, you might create a college savings account or a rainy day fund, just to know they're taken care of if anything happens to you.

Being the caregiver for a parent carries its own set of financial concerns, so you may want to set up a fund that will be used to pay for in-home nursing, physical therapy or even for their leisure pursuits. Start saving now, and you may be able to take your parents on a once-in-a-lifetime vacation or support them in visiting friends and relatives so they can stay active during retirement.

Regular transfers to a high-yield savings account will help you build up reserves that protect your family's interests and create financial stability at all stages of their lives.

Insure your family

There are several types of insurance you may want to incorporate into your family financial planning discussions.

A family health insurance plan will cover you and your dependents' medical needs. You'll need to weigh a high premium with a low deductible and vice versa to determine what works for your family's budget. But having coverage is important, especially if anyone gets seriously ill or injured. Insurance helps to insulate your family from accumulating high medical debt. 

Not all health insurance plans include vision and dental coverage, but these may be good options for your family, especially if anyone needs glasses. Routine dental care is important for preventing costly problems and oral surgery that eat up a substantial portion of your savings. 

In addition to an individual life insurance policy for yourself, your spouse may want to take out a policy as well. You can also take out a joint life insurance policy, though you'll want to speak with your insurance agent or financial planner to determine which approach makes the most sense, as there are different payout terms and tax considerations for each. It's also wise to talk with your dependent parents about whether they have life insurance, as they may want those funds to cover their funeral expenses or other costs when they pass.

Disability insurance replaces your income if you get hurt or become too ill to work. You can purchase short-term (6 months and under) and long-term (6 months or longer) disability to minimize your family's financial suffering during your recovery. Although disability insurance doesn't cover long-term care, it can be an important component of your plan for staying financially resilient in the face of injury or illness. 

Invest for your family's future

Your investment portfolio will ultimately reflect your family's goals and values, and a financial planner can help you define those and choose the right investments. But at a basic level, you want to look into a 401(k) and traditional and Roth IRAs for you and your spouse. You may also want to open a brokerage account, purchase real estate or explore other investment options to generate additional income. Doing so can help you build wealth on top of your work income, creating more stability and giving you more freedom in your family's decisions down the road.

Practice ongoing wealth management

Your family's needs will change over time. As your children grow, they'll develop interests and ambitions that you'll want to support. They may get sick and you'll want to provide them with the best medical care you can find. When it's time to choose a college, you'll want to help them attend the best schools. Each of these scenarios is helped by financial planning.

The pattern will look different for you and your spouse, or your parents, but the principle remains—your financial needs change as times goes on. Thinking ahead allows you to build and sustain wealth that supports your family's best interests.


A few financial insights for your life

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This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.