I am not a perfect parent. Heck, according to my 13-year-old, I'm not even a good parent. There is one thing that I have done right, though, and that is to make sure that my children know that we have a plan and the resources to care for them. Maybe it is because of my personality, but my kids have always asked questions like, "What will happen if Daddy loses his job?" or "Who will take care of us if something happens to you?"
I think that searching for a sense of security is a normal part of being a child, and it is probably doubly important to children who move frequently and often have a parent gone for months at a time. Kids like ours. And every parent wants their child to feel safe and secure.
There are three main aspects of financial planning that directly affect your children's feelings of safety. The first is having a lifetime spending plan that has a good balance between demonstrating the value of money and making sure that they know that you have enough for essentials. The second is having all the right legal documents in place in case of a tragedy. The third is having the right amount and kind of insurance.
Your Money and Your LifestyleLet me ask you a question. Which would make you feel more safe: knowing that you had a house full of stuff, or knowing that you had enough money to meet your essential needs of food, shelter and clothing? Children are surprisingly aware of the financial stability of their families. Regardless of your income level, spending above your means creates imbalance in your family life and it impacts the entire family in ways that I can't even fully describe.
Kids like to think that their parents have things under control. Ha! While you certainly can't control everything, there are many things you can do to build a solid financial foundation for your families. The first is living below your means, and building up an emergency fund for the surprises of life. No kid wants to break their arm and hear their parents whispering about how they will pay the bill. What kids do need to hear, however, are frank conversations about how the family prioritizes their spending to best provide for their needs and allow for the fulfillment of some of their wants. This shows children that their parents are thinking about the future and ensuring that their needs will be met. It also provides a great example for your children to learn that sometimes choosing savings over a new TV is the right choice.
Legal DocumentsLegal documents are fairly simple to have done. You absolutely must have wills that provides for guardianship of your children. Otherwise, the court will get to decide who cares for your children if you are unable. You can go to the legal office on base and they will do your wills for free. They'll also help you figure though all the details of guardianship (care of the children) and trusteeship (care of the money.)
The first time one of my children asked who would take care of them if something happened to their father and me, they were very young. Even so, they were instantly satisfied when I explained that they would go live with Auntie Erin, and if not Auntie Erin, then Auntie Rachel. I though that just the idea of losing Mom and Dad would be upsetting, but apparently they were more concerned that there was a plan. Who knew?
InsuranceThere are many kinds of insurance to provide against a wide variety of perils. For your family and you, the most important insurances are health insurance, disability insurance, homeowners/renters insurance, and life insurance. There might be other types of insurance that apply to your specific situations, but these are the four big ones.
Obviously, health insurance is important and expensive. The benefits of Tricare are pretty amazing, and the cost is outstanding. If you transition from the service, make sure you have a plan for health insurance. No one wants to skip out on care for their children because they can not afford it.
Disability insurance is an interesting animal. Military service provides a fairly high level of disability coverage, enough that most insurers won't provide additional disability insurance for active duty folks. However, keep this in mind when you get out, or if you have a spouse's income upon which your family relies.
Homeowner's or renter's insurance provides a wide variety of security for your family. Not only will it replace your home and it's contents if disaster strikes, it will also help with a place to live while your home is being repaired.
Life insurance is designed to provide for your loved one's needs if you are unable. Obviously, that is exactly what we are talking about here. Servicemembers have access to low-cost, term life insurance through the Servicemembers Group Life Insurance (SGLI) program, and their spouses can be insured through the Family Servicemembers Group Life Insurance (FSGLI) program. While the price is right, you lose eligibility for these programs once you leave the service. Unfortunately, that is often at the age where things like high cholesterol and high blood pressure start showing up, meaning higher rates. Another option is to purchase insurance outside of SGLI while you are still young and healthy.
I could write thousands of words about life insurance and not cover it all. The most important part is that you buy it! Pick three reputable companies, do a quick and dirty comparison, and start the coverage. Use a life insurance calculator to figure out how much you need. Be sure to include all military benefits such as Dependency and Indemnity Compensation, Survivor Benefit Plan, and Survivors Education Benefits in your calculations.
The other insurance question is health insurance. I honestly had never considered this until one of my children asked me. If you are on active duty or retired and you die, your children will retain their Tricare coverage. However, if you have transitioned out of the service, you need to consider whether their guardian would be able to add the children to their health insurance or if insurance would have to be purchased for the children. This changes the amount of money that will be needed to care for the children.
Wow! I intended this to be short little piece talking about how your spending affects your kids' feelings of security, and it turned into an epic piece. I hope that it wasn't too much to digest at one time. Remember: smart spending, wills, and insurance. Even if they never thank you, your kids will appreciate it.