As a parent, it is natural to worry about your children’s fortune. Will they have everything they need? Will they struggle to pay bills? Will they sacrifice luxuries to provide for your grandchildren?
These are all valid questions that as a parent, I often ask myself. We have a driving force that is parental instinct to try to provide a better life for our children than we enjoyed growing up. Despite all of our efforts, evidence shows that our children are likely to be worse off than we are.
Regardless of evidence, you can still make sure your family has all that it needs to enjoy life rather than struggle. Careful planning in your forties and fifties can ensure you leave a sizeable income to eventually, pass on.
Where Does Financial Security Start?
First, you have to tackle your outstanding debt. Consider this, interest on loans and credit cards are high and the money you spend on servicing interest is dead money. It provides no benefit except for convenience.
Pay down your monthly consumer debts such as store cards and credit card until you have a healthy balance that you can clear each month without accruing interest charges. If you are wondering why you would not pay everything off completely then consider this, when money sits in your account accruing interest, no matter how small, you are making money.
As long as you have the discipline to clear your balance before you get interest charges, you are operating an efficient credit card account. For most people, getting rid of cards altogether is a much better option.
Shrewd Ways to Invest for Your Family’s Future
Your pension is a great way to invest because you will not pay tax on your earnings that you invest into a pension plan (subject to thresholds). You will pay tax when you eventually decide to cash in your pension, but there are tax efficient ways to do this, particularly, by taking the 25% lump sum before you reach the age of 75. Speak to a professional to learn more.
Invest in Your Mortgage
Few investments can compare with your mortgage. Pay more off your mortgage and you are both reducing interest payments and likely investing in an asset that will increase in value. Overpayment on your mortgage is a an efficient way to pay down your mortgae quicker.
This video from the Money Advice Service explains the benefit of paying down your mortgage faster.
What About Life Cover? Just in case, you do not make it to retirement.
Life cover will provide your family with a lump sum that could clear your outstanding debts in the event of your death.
This will ensure your family does not need to find mortgage payments, rent payments or raise funds for large purchases such as deposits on your children’s first homes, weddings or other expenses. Life cover is a very cost effective way to provide security. I wrote a blog post about live cover and that explains in more detail here
...or you can get life insurance quotes here in less than five minutes.
© ActiveQuote Ltd. 2017