How to Protect Your Family’s Finances

The economy might be very strong now, but wages aren’t rising and for most American families worries about money are never far from mind.  However, this shouldn’t make you feel powerless as there are plenty of things you can do to protect your family’s finances.

Plan for the Future

One of the worst things that you can do with your family’s money is to assume that things will remain the same.  Sure, you might have a good job at the moment and everyone might be in good health, but circumstances can change.  As such, you want to create a plan, one which not only makes sure you have enough money for today but also helps to protect your family in times of uncertainty.

For example, New York wrongful termination attorneys at Carey Kane LLP note that just about ‘anyone can be wrongfully terminated’ and this could mean the end of the end of a significant income stream for a family.  While you might not be able to pick when or if you will lose your job, the one thing you can do is to have a plan to start saving money.

This starts by looking at your monthly expenses and then matching it to your income.  While there is no hard and fast rule when it comes to what percentage of your income to save, a goal is about 10 percent – if you can.

If you are facing a significant cash crunch, then you might want to consider an approach to get you to save $50 per week. Granted, this might sound like a lot of money but doing so will help you to build up a rainy-day fund.

To get started, you will want to look at your income and your expenses and then cut back on any items with are ‘luxuries’ – at least for now.  This might lead to some pain in the short-term but seeing your bank account grow will be all the motivation that you need to keep going.

Don’t Put All Your Eggs in One Basket

For those who are fortunate to have some extra money at the end of the month, the next step is to begin to invest.  If this is where you find yourself, then congratulations. At the same time, you also need to mindful of where you are putting your money.

Keep in mind that no investment is without out risk and for that reason, you never want to put all your investment capital in one basket.  Doing so will ensure that a correction in one part of the market will not wipe away all your hard-earned money.

By the way, don’t think that this won’t happen to you.  Even professional money managers have down years, and these are the same folks with access to the best market research and investment strategies.

If you are just seeking to protect your family’s finances, then the best bet is to stick with a portfolio which will deliver growth with as little risk as possible.  This includes investing in an S&P 500 index fund, government savings bonds, and cash.  Don’t even think about more exotic investments at this point – stick with the proven winners and use the returns to make additional investments.

Don’t Fall Prey to FOMO

Fear Of Missing Out – this is something which drives market madness and can be seen in almost every market when it seems like the only direction it can go is up.  Examples of this include the dotcom bust at the dawn of the century or the popping of the Bitcoin bubble earlier this year.

In both cases, the ‘experts’ prognosticated that the markets would only go up.  While this was true in the near-term, we all know how these movies ended.  The dot-com bust ended up wiping away billions in value and Bitcoin’s fall from near $20,000 to $6,000 has left many investors the poorer for getting caught up in the hype.

As such, don’t find yourself worrying about missing out on the next big thing.  If you do miss the bus this time, don’t fret as there is always another great investment opportunity around the corner – in fact, you might even be able to buy up some of the assets stranded by the inevitable bust on the cheap.

Remember, your goal is to protect your family’s finances, and this means you need to be conservative.  As such, if everyone is running towards an investment, then you might want to consider looking for the exit.

Just because the markets are irrational doesn’t mean that you need to lose your mind when your family’s financial future is at stake.

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