If you are the breadwinner in your family, you will probably want some assurance that you can provide for them after you are gone as well as during your life. With planning, you can provide financial security for those who are dependent upon you for their welfare.

Meet Basic Needs

A reasonable goal would be to provide your family enough money to meet their basic needs… Food, Shelter and Clothing. This will take work, and it usually takes time. You can begin training yourself to accumulate savings when you are on your own that can then be used when you are responsible for others.

Live Below Your Means

One of most efficient ways of doing this is by living below your means. In other words, spend no more than 85% of your earnings and save the rest. Most of the time, this means that you will not have all of the physical possessions, or will be able to afford all of the activities that your friends participate in. But creating savings at the early point of your life, and continuing this habit, will ensure that you will be able to afford luxuries in the future.

Save for Emergencies

Establish a savings account that can be accessed at any time for unexpected emergencies that pop up. Work very hard to put 15% of your earnings into that account.

Don’t worry about the interest rate of this account. Your objective is to sock away as much as you can into this account. When that emergency stash gets to a certain level, the overflow should be placed in a long-term investment account. It is this account that will allow you to enjoy future luxuries.

Plan for Retirement

If your employer offers a qualified retirement plan, strive to put 15% of your pre-tax income into that plan, regardless whether or not your employer matches your contributions. This should be done only after your emergency savings account is funded. Withdrawals from retirement plans may be subject to a 10% penalty if withdrawn before the age of 59 ½, depending on the type of plan.

Get Your Family on Board

When you have a family, instill in them the need to live below their means. Family emergencies tend to be less forecastable and more expensive than those of a single person. The size of the emergency savings account will have to increase as you become responsible for more souls. Children bring many expenses to the family budget. Many of these expenses are ever-present, and we know how much we spend on them. However, these more visible and immediate expenses may cause us to neglect our important long-term savings goal. We may be persuaded by our consumer-driven culture to spend all we make, and not make the sacrifice of reducing our standard-of-living so we can continue to feed our long term investment account.

Teach Your Children How to Handle Money

One of the most important things you can do is teach your children to handle money in a responsible manner. You might want to share some financial matters with the entire family. In this way, your children will understand that there are always limited resources to work with, and we need to decide between the important, and the frivolous. They will tend to follow your lead and your actions when it comes to dealing with money.

Protect Against Disaster: Life Insurance

If you are responsible for the livelihood of others, you must protect them from the worst possible disaster by acquiring life insurance. If you were to pass away without life insurance, the children would not only lose you as their irreplaceable loved one, they would also lose the life your support provides, their school and their friends, for surely they would have to move to a less expensive neighborhood. If you are married, they would lose the comfort and attention of your spouse, for surely they would have to go to work or work more hours to support the smaller family. And, if your partner had not been in the workforce before, the odds are that their rate of pay would be considerably lower than yours.

Life insurance for the head of a younger family is not expensive. A policy that pays $1 million for a 35 year old in good health will cost less than $40/month. This policy will provide protection for a period of 20 years, after which time the children will likely be on their own, and the need for life insurance is not as critical.

The cost of this life insurance is low because the odds of a 35 year old dying during the next 20 years is very low. However, if it happens to you, the effect on your family will be disastrous.

Focus on Financial Independence

As the family grows, and the children move away, the breadwinner will approach the maximum earning years of their lives. It is at this point that you can concentrate on becoming financially independent so your children won’t have to support you in your old age.

If you have been successful in saving 15% of your income, you will finally be in a position to shower them with some of the gifts that you were not able to afford when they were younger, as well as immerse yourself in the items of luxury which you denied yourself while you were focusing on building your long term account.