Despite family members being our nearest and dearest, most of us have never had a serious discussion with them about long-term financial plans. This is especially important in events of significant change and will help our family members cope during these challenging periods.
The Power of Protection: Facing the Future, a report published by HSBC in 2017, revealed that 80% of those interviewed said that the health and happiness of their family members was of utmost importance, but many have never explored long-term financial security issues with them.
70% of those interviewed currently provide financial assistance to their family members. However, if they lose the ability to work because of critical illnesses or accidents, their family will not be compensated by current insurance plans for the loss of income.
There are many risks that could put pressure on financial security, especially if you're supporting your family members financially. The Power of Protection: Facing the Future report lists critical illnesses such as cancer (52%), a family member suffering from a critical illness (39%), and a sharp increase in the cost of living (34%) as some of the risks with the biggest impact.
When accidents occur, families who haven't done financial planning may find it difficult to maintain their existing standard of living, and may even find their expenses climbing. This is why it's so important to prepare adequately for your family's financial security by determining how you manage your finances, no matter how much you own in assets.
These 4 steps will help you prepare for the future of your family:
- Determine your most important goalsWhen you map out the goals you want to hit most urgently, make sure your financial planning will be able to cover your personal and family’s needs.
- Evaluate your financial situationReview the state of your assets. Will the financial support you're giving out go up or down in future? Do you need to update your financial management plans?
- Plan for the entire familyAccidents could affect a family very seriously. Be sure you're covered sufficiently for these unforeseen circumstances when evaluating your financial management plans.
- Discuss the futureIf something happens and brings about major changes to your life, what impact would it have on the lives of your family members? What measures have you taken up to ensure your financial security? Consult a professional advisor if you have any questions.
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