Family Finances: Budgeting for Life Insurance
Have you thought about how to fit life insurance into your family’s budget? There are 2 types of people when it comes to money; spenders and savers. You either set aside money to save and then spend what’s left over or you spend what you have and save what’s left over, if anything. One type of person is fiscally responsible and will have money when they need it. The other type is generally considered fiscally undisciplined, probably has more fun or better stories to tell than their counterpart, but will not have money when they need it. As statistics show, there are a lot more of the second type of people out there than the first type.
Hopefully that got your attention. I realize that before you know what you can set aside, you need to determine what your essential monthly expenses are. So, how do you decide what is essential? A reasonable person might grant that housing (mortgage/rent), food, electric, heat, water would all qualify as essential. If you live in a major city and don’t have a car, you can avoid the next one but not the cost of commuting. Government mandated car insurance, you can’t forget about that. Have renter’s or home owner’s insurance? Got credit card debt? Have to pay those every month. How about cable/satellite TV? Maybe essential but as more and more people are leaving cable for Netflix, Hulu, Amazon Prime or other content providers you might want to reconsider the $30/month you’re spending on basic cable. Do you really need HBO, Showtime or movie channels? If so, $60/month? You may want those things, but are they essential? Internet, most people would say essential (hopefully you can get a bundle discount). Have we hit $100/month yet? Cell phone bill, how much is that? Do you really need unlimited data, a phone with a screen the size of a lunch tray or with a camera more powerful than the Hubble? Got student loans? Oops, forgot about health insurance. What about life insurance?
Unless they’ve experienced loss, most people don’t give life insurance much thought as an essential expense. If you have a family, consider this, how is your significant other going to pay for any of the above if you’re not around anymore? Your mortgage holder, landlord, credit card company, electric company, no one you owe money to cares if you had a bad month or if you someone you depend on dies. How are you going to pay for daycare, keep your home, or repay debt if your significant other passes away without life insurance? I assure you, if that happens, what you define as essential changes instantly.
If you’re young or single, life insurance should still be important to you. I’m sure you’ve gotten annoyed when a friend has no money and you have to pay for dinner or drinks at the bar. Imagine having to flip the bill on a funeral that costs thousands. How would you feel if suddenly you have to pay your friend’s bills? That would be awful. If someone co-signed your loans and you passed, they would be on the hook for your bills. Life insurance goes beyond courtesy; it is part of being financially responsible.
If you already have life insurance, do not let it lapse. Generally speaking, when things get tough, people find things to cut out of their expenses. Rather than lower a data plan or get rid of premium channels, people get rid of life insurance. Try this, next time you reach for your policy, don’t throw it in the trash, walk over to a frame, take out the picture of the person/people you love and tape it to the cover of your policy. Maybe then you’ll understand or remember the importance of why and for whom you got the policy in the first place.
Life insurance is an essential part of your financial life. There are many options that can fit your personal budget. Understanding what is essential and what isn’t will help you prioritize how you allocate your resources, allowing you to focus on what is really important. It will allow you to save and work towards your goals safely, just like a seat belt protects you while you get from one place to another.
About the author: Anthony Veloso has been in the life insurance business for over 2 years. He enjoys coaching football, playing outside with his dog, and taking day trips with his wife and newly born daughter. Anthony is a strong supporter of Orphanages and Battered Woman’s shelters. He would love to put his experience to work for your family to ensure that you have the right life insurance policy. You can contact Anthony at 1-800-654-1953 or AVeloso@Pivot.com.