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8 ways to defend your family finances from whatever comes next

Ethan Rotberg
·5 min read
8 ways to defend your family finances from whatever comes next
8 ways to defend your family finances from whatever comes next

A family budget is a delicate thing to balance, even without a pandemic crashing through and jumbling your finances.

In a chaotic year like this, with the country dealing with a recession, ugly unemployment rates, political tensions and new waves of the coronavirus, you’ll need to arm yourself with extra financial tools to protect your household from potential money troubles.

Here are eight ways you can defend your family’s finances, starting today.

1. Clear as much debt as you can

Credit cards for  payment  products with your business.
ShutterOK / Shutterstock

Paying down debt may be the most impactful way to protect your family’s finances — especially if high-interest debts like credit cards are draining more of your cash each month.

So long as your credit score is in decent shape, you should consider consolidating your debts with a personal loan.

With a good debt consolidation loan, you can replace all of your debts with a single loan at a much lower interest rate.

That will save you money and give you some breathing room. A free service will allow you to quickly compare loan offers from multiple lenders, making it easy to find the best rate possible.

2. Stop up the leaks in your budget

The pandemic has already forced us to cut back, whether we like it or not.

But you may still be leaking money out of your family budget if you're paying too much for services like your cellphone plan, or if you're not using a cash-back app to save every time you shop.

Plug the leaks by looking for the better deals that are out there. For example, with a little comparison shopping you may be able to save $1,000 a year on your homeowners insurance.

And shop around for your car insurance at least once a year, because you may be severely overpaying for your coverage.

3. Refinance your mortgage

Father Giving Son Ride On Shoulders Outside House
Monkey Business Images / Shutterstock

Want to make a serious dent in your monthly expenses? If you're a homeowner and haven't refinanced yet, it's long past time.

Thanks to the rock-bottom interest rates that have accompanied the pandemic, some 18.5 million homeowners have the potential to cut their monthly payments by more than $300, says data firm Black Knight.

If you have a solid credit score and at least 20% home equity, you can refinance your home at record-low rates before they creep higher.

Rates can vary wildly from one lender to the next, so be sure to shop around and compare a minimum of five quotes to get the best rates.

4. Protect your family with life insurance

It’s not something people want to think about, but this is one of the big ones. Just imagine how hard it would be for your family to get by without the money you bring home.

Your finances might seem precarious right now, but consider using a small amount of money to open a life insurance policy. Because life is uncertain and fragile.

Term life insurance — which covers you for a set number of years — can cost less than $1 a day, and the payout to your family will always be tax-free.

Use a website that will help you compare policies side by side, so you can find the best price for coverage that fits your family’s needs.

5. Pad your emergency fund

Jar of english money with rainy day background
Jeanette Teare / Shutterstock

It’s important to stay nimble if any crisis comes, and that means having cash on hand that you can use for anything.

Your rainy-day money can bail you out if you suffer a sudden layoff or an unexpected medical bill. There’s no secret formula, but financial experts suggest saving enough to cover three to six months' worth of regular expenses.

Once you begin to build your emergency fund, stash it in a high-yield savings account. You’ll have instant access when you need it, and in the meantime you’ll earn much more interest than you would with a traditional savings account.

6. Guard your income against illness and injury

We’ve had to think about our health a lot more than usual this year, but it should be a consideration in any financial plan.

COVID-19 isn’t the only thing that could stop you from working, and many Americans aren’t covered for long-term disability through their employer.

Thankfully, there’s a really affordable way to protect yourself and your family. For just pennies a day, you can get disability insurance so you don’t lose all your income in case you can’t work.

You can get a quote in seconds and be covered in 15 minutes. It’s just too easy and too important to ignore any longer.

7. Don't fuss with your investments

Worried stressed businessman in suit shocked by bad news using laptop
fizkes / Shutterstock

After a long period of stability, the stock market was tossed into disarray by the COVID-19 pandemic. It’s a volatile time to be an investor, to be sure.

Instead of stressing out, just accept the situation and remember that — for most people — investing is all about taking the long view. You want to see your money grow over time for your retirement and other big goals.

If you need help managing your investments in an unstable market, consider using a robo-advisor that will automatically adjust your portfolio to any dramatic changes over the next few months — so you don’t have to.

8. Talk with a professional

You don’t need to be wealthy to hire a financial adviser. Everyone could use a little help.

These days you can work with a certified financial planner online and at an affordable price to help you guard your family’s finances now and into the future.

A financial professional will customize a plan for you, whether you’re just starting your family or are enjoying retirement.