4 Ways to Secure Your Family’s Future-Newlyweds Edition
Getting married is one of the best things that will ever happen in your life. The opportunity to build the rest of your life with the person you love the most is unmatched. There are some steps you should take now as a newlywed to secure your spouse’s future (and your kids’ future if you choose to have them). Here are 4 simple ways to secure your family’s future:
#1 Get Term Life Insurance
This is one of the most overlooked things you can do to give your family a security blanket should something happen to you. Term life insurance works by paying your beneficiary (ideally you should choose your spouse) the “face value” of the policy if you die before the term has ended. For example, if you took out a $1,000,000 policy for a 20-year term (generally recommended), and you died 5 years later, your spouse would receive $1,000,000.
Think $1,000,000 will cost too much? Think again! Term life insurance costs vary, but the average cost for a 20-year, $1,000,000 policy for a 35-year-old is around $53 per month according to Good Financial Cents. This price is even cheaper for healthy 25-year-olds, coming in around the $30 per month range. Talk about dirt cheap! It is a small price to pay to make sure your family is taken care of should you die unexpectedly.
How do you determine how much your policy should be worth and how long of a term? That is a highly individual question, but it is generally recommended that you take out a 20-year policy that will pay 10-12 times your annual salary. That way, your spouse has enough to take care of himself or herself as well as the kids for several years. If that money is properly invested, it can take care of not just your family for their lifetime but it can also can be passed to future generations as well. Check out this article for more information on how much life insurance to purchase.
#2 Invest as Early and as Consistently as Possible
Retirement can seem like such a long way for young newlyweds. However, starting your retirement investments now can allow you to build significant wealth over time.
How much should you invest? One of the nation’s leading financial experts, Dave Ramsey, recommends investing 15% of your gross income (that is before taxes) in retirement accounts (after getting out of debt of course, see #3).
The key here is not only starting early but being extremely intentional about investing. Overtime, your retirement accounts can blossom into millions of dollars, giving your family a very secure future. Check out this article to see some numbers. It also allows you to be generous and leave an inheritance (see #4).
#3 Get Out of Debt as Quickly as Possible
Now that you know investing is a critical way to securing your family’s future, it is time for you take control over your income! Your income allows you to invest and build wealth. Debt on the other hand steals your income each month in the form of payments. This can greatly hinder your retirement investing progress!
Do not let debt steal your family’s future! There are several approaches to getting out of debt quickly. The two mainstream approaches are the debt snowball and the debt avalanche. Both approaches have pros and cons, so research and decide which one is best for you, then knock out that debt!
#4 Create an Estate Plan
An estate plan? What on earth is that? Put simply, it is having a plan for your assets when you pass away and deciding who can make healthcare and financial decisions on your behalf should you be incapable of doing so.
But doesn’t my new spouse get everything and get to make all of those decisions for me? Not necessarily. You may be surprised to find that in some states (such as North Carolina) there are many cases in which your spouse gets some of your assets and your parents get the rest (only if you do not have kids). You may or may not want that to be the case.
Furthermore, assuming you now have the retirement accounts and life insurance, not having a complete plan for these things is like having all of the ingredients for a beautiful, delicious wedding cake, but leaving out the eggs that hold the cake together. Your estate plan is the egg that holds all of the previous things we talked about together to absolutely secure your family’s future.
Best of all, your attorney can help advise you on both the life insurance and the retirement accounts (tax things you have probably never considered or even heard of). Therefore, meeting with an attorney and creating your estate plan is crucial to securing your family’s future!
As a newlywed, the greatest journey of your life has just begun. However, your responsibilities just got upped as well. You want to provide the best life possible for your new spouse and your family. If you do each of the things above, I promise you that you will be well on your way to securing your family’s future!