As a young family, you will be facing a lot of new challenges that you may or may not be prepared for along the way. Whether it’s children, a mortgage, or unexpected expenses that come up, now is the perfect time to start thinkingabout all the potential pitfalls that may arise.
In this article, we want to share some of the ways that insurance can help you stay ahead of these issues, as well as how to prepare yourself for some of life’s obstacles that you and your family may face.
Now that you’re starting a family, your life is just one piece of the puzzle. Yourspouse and any children are also top priorities, meaning that you shouldconsider what could happen to everyone in a variety of scenarios. Here aresome crucial questions you and your partner should discuss;
While this question may seem a bitmorbid, it’s a necessary possibility to plan for, particularly if you are a one-income household. Even with two breadwinners, chances are that your bills and financial responsibilities are too much for one person, meaning that youneed to supplement any lost income as a result of one of you passing away.
Disability can cripple a family unit almost as much as death. Not only do you have to worry aboutlosing income because you or your spouse can’t work, but you will likely have mounting medical bills that will exacerbate the situation.
Even if one of you can still work, is the disabled spouse able to care for the children? Will his or her disability impact their ability to do simple tasks, like buying groceries, picking the children up from school or even changingdiapers? If the worst should happen, you need to be ready.
If you’re like most Canadians, you probably worry about having enough money saved for your children’s post-secondary education and your retirement.
As a young family, you may believe that retirement is an event that’s too far off to consider right now, but the fact remains that when you begin saving for retirement will have a significant impact on how comfortable your retirement will be. Sooner rather than later is advisable for both retirement and university savings. Remember, kids grow up fast and you will want to be ready to help them avoid crippling student debt.
Worrying about the future can be stressful, which is why it’s imperative that you and your spouse put a plan into place. Thankfully, insurance policies can help create peace of mind for both of you, so let’s look at some of the optionsavailable;
Regardless of your current financial situation, if you or your spouse dies suddenly, it can derail your plans, and it could put your family at risk of accruing debt. When discussing life insurance plans, here are a couple of things to consider;
As we mentioned, a disability can hurt your family as much as a death can. Depending on your employer, you may be eligible for disability insurance through a group plan. One thing that you don’t want to solely rely on, however,is government benefits such as the Canada Pension Plan. Unless you’ve been paying into CPP for many years, your disability benefits most likely would not be enough to cover expenses and lost wages.
Instead, it’s probably best to get an individual disability insurance policy so that you know you’re covered and won’t face any financial shortfalls.
University education and retirement are two massive expenses for which you should be prepared. Also, if you don’t have a house yet, you should plan on paying a mortgage for up to 30 or 40 years as well. Here are some tips to helpyou save money for these life events;
You may think that saving for these things means that you have to put most of your paycheck away each month. However, even if you save $25 a week, that’s better than nothing. Over time, the money will grow and earn interest, meaning that you can wind up with a significant amount when the time comes.
When it comes to planning for post-secondary education, an RESP is an excellent way to put aside money for your children. The government will also pay a bonus of up to $500 per year (to a maximum of $7,200) on eligiblecontributions.
Registered Savings Plans allow you to invest for your retirement and deduct your deposit from your income for income tax purposes. Usually, the maximum allowable contribution is the lesser of 18% of your previous year’s earned income or the maximum contribution amount that changes each year.
Perhaps even before starting an RSP, consider opening a Tax-Free Savings Account.
There is an old saying, that people don’t plan to fail, they fail to plan. The sooner you start that planning the more effective it will be. As always, please feel free to share this information with anyone you think would find it of interest.
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