Raising a Family

Balancing Act: How to Budget for What Matters Most

Cutting costs to focus on paying off debt or saving more is a smart move. Just make sure you’re not saving by eliminating the wrong things.

The cost of living continues to rise each year and household debt is following suit. In fact, the average household carries nearly $17,000 in credit card debt.1 In this debt-heavy environment, more families are making compromises and cutting corners. Of course, expenses like food and housing always have priority, but life insurance should also be one of the “must haves.” Here are quick tips to make sure your family’s priorities are accounted for in a thoughtful way.

1. Get the facts

There is a significant misunderstanding of how much an adequate life insurance policy costs. After shopping around, 37 percent of millennials and 25 percent of Gen Xers discovered the cost was lower or considerably lower than they expected.2 Furthermore, a term life policy can be more affordable than a whole life policy and often may be sufficient. In addition, for a 40-year-old nonsmoking female in good health, a 20-year, $500,000 policy can cost as little as $31 a month.*

2. Focus on the freebies

If your monthly budget is already tight – and fitting life insurance in seems impossible – consider how you’re spending your leisure time. Take advantage of low-cost or free pastimes like jogging on a local trail, borrowing books and DVDs from the library, or having friends over instead of dining out or going to the movies. The savings will add up quickly, and before you know it, your life insurance bill will be covered.

3. Save first

Pay your bills, do your grocery shopping, maybe splurge on something and then see if anything is left over. If this sounds familiar, you aren’t alone. More than 40 percent of Americans are living paycheck to paycheck.3 For saving to be effective, it should be automatic and should happen before you touch your paycheck. You’ll be surprised what you don’t miss in your account if it’s not there to begin with.

4. Build a strong financial foundation

Remember the reason you considered life insurance – to help protect your spouse or partner, children, parents or others from a potential financial burden if they lost you. It’s better to have some life insurance coverage, than none at all. Identify what you can afford today and put that coverage in place. Then, as your situation changes and your budget allows you can add the coverage you need. Start somewhere and know that every little bit helps!

Tip: Dedicate separate accounts for emergencies, retirement and insurance, and long-term goals (like home improvements or vacations). Set up regular direct deposits into each account. And remember, every little bit helps!

A life insurance policy is one of the most important things to budget for. It can provide financial security in the event of sudden loss and can help cover expenses like ongoing mortgage payments or children’s tuition. Watch “What to Consider When Shopping for Life Insurance” to help you understand the most important things to look for in a life insurance company so you don’t skimp on what matters most.

1 2016 American Household Credit Card Debt Study, NerdWallet, 2016.
2 2016 Amica Life Financial Peace of Mind Study, Amica Life, 2016.
3 20 Money Stats That Will Blow You Away, The Motley Fool, 2016.

*Sample monthly premium for 20-year Term Life insurance with benefit amounts shown for a Female at age shown. Rates are Premier Select and are guaranteed to remain level for the 20-year period. Monthly premium rates are available via EFT (electronic funds transfer). Actual premiums can only be determined by a full application and underwriting process, including some medical testing at our expense. Depending on your exact age and health, your actual rates may be higher or lower. Standard form numbers ICC15 FGCLT01-01 in most states. Not all plans are available in all durations and at all ages. Some features may not be available in all states.

ALIC36818 (exp. 12/19)

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