Reduce Your Family’s Household Debt to Change Your Future

Let’s get into some tips that can help reduce your household debt. While the future may be unpredictable, it doesn’t mean that you cannot take control of your family’s finances.

Here’s what you can do to build greater confidence for your family’s financial future.

Make sure your family is well-insured

The most crucial step in ensuring your family’s financial future would be to ensure that every single family member is well-insured. With the potential of hefty medical bills, not being insured could result in terrifying sums should any of your family members require medical attention.

To avoid this situation, consider life insurance plans that typically come in two types: whole life insurance and term life insurance. This can help your family guard against life’s uncertainties, in the event of death, terminal illness or total and permanent disability (TPD).

Your life insurance can issue payouts to either your named beneficiaries or dependents to cushion your loved ones against major financial burden.

With so many myths surrounding life insurance, getting started can be difficult. We debunk those popular misconceptions so you can make a better, well-informed decision. Read our guide here.

Review your life insurance coverage

If you’ve already taken the first step to insure your family members, congratulations! But that’s not the end of it. You have to remember to constantly review your life insurance coverage to assess if you and your loved ones are sufficiently covered. As a rule of thumb, you should do this annually.

As you transition into different life phases, your ideal life coverage mix tends to change. For instance, perhaps you’ve purchased your life insurance when you were a swinging single with little to no commitments.

As you transition into different life phases, your ideal life coverage mix tends to change.

At that point in life, you would probably require a lower amount of coverage. However, as you get married and start your own family, this amount of coverage might be insufficient.

Furthermore, the insurance market is constantly changing, with newer and more advanced policies being offered to the masses. In fact, some of these new policies may even offer better value compared to your existing ones.

Doing a review from time to time allows you to have a greater understanding of how your insurance plans are working out for your lifestyle and needs, and determine if you require additional protection to safeguard your family’s financial future.

Read more: Questions to Ask Your Financial Advisor During Your Annual Review

Protect your home

In Singapore, your home is likely to be one of your most expensive assets. Similar to how life insurance protects your family, getting mortgage insurance is also vital to protect the home and family that you love.

Mortgage insurance ensures that you are able to service your mortgage repayment for your entire home loan tenure in unforeseen circumstances such as total permanent disability or death.

Read more: Mortgage 101: What is Loan Tenure, LTV, and IWAA?

This means that mortgage insurance makes sure that your family will always have a shelter over their heads and not be fazed with huge debts should anything unfortunate occur. In the event of your demise, mortgage insurance will pay for the balance of your mortgage.

Pay off credit card bills

In this day and age, credit cards have inevitably become one of our daily must-haves. While credit cards used to be synonymously known with debts, using your credit card wisely can actually help you save money and reap benefits that cash cannot match.

However, it’s imperative to remember not to carry a balance at the end of your credit card bill statement, or risk having to face penalties imposed by the banks.

For credit card newbies, take note that paying the minimum amount of payment will not suffice, as this will still result in a monthly interest charged. Over time, this interest that is compounded on a daily basis will mean that your outstanding balance could add up to a significant sum over time.

TL;DR — Make sure to always keep track of your expenses so you have enough cash to make full credit card repayment at the end of every month.

Download the Planner Bee app for a fuss-free expense tracking process. 

Make it a fun challenge for the entire family

Ensuring a better financial future for the family doesn’t have to be a lonely journey. Involve your entire family and make it a fun challenge.

For the little ones, inculcate financial literacy in them from a young age and encourage them to start saving as early as possible. For a start, give them a small allowance when they help out in household chores and teach them how to spend the money wisely.

When they are older, having them earn their own keep through part-time jobs can empower them to learn wiser money management.

Additionally, keep communication channels open with your partner. Have a discussion on how you’re splitting the responsibilities for the current bills and contingency plans for family finances during rainy days.

Create an emergency fund

Life always throws unexpected curveballs, but staying prepared can help you deal with the situation better.

Create an emergency fund in case of unforeseen circumstances. As a gauge, this fund should be enough to cover at least six months of your household expenses, and cushion against the challenges that may be thrown your way.

This fund should be enough to cover at least six months of your household expenses.

Discuss with your partner on how you’d like to build your emergency fund. For example, you could both practise putting a small amount of money aside into a separate account.

Over time, this amount will add up and you’d be grateful you had the foresight to do so in the event that you have to use this money someday.

Need a quick emergency fund calculator? We’ve got you covered. Use the Planner Bee one for free, with no need to log in.

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