Personal Finances – Phase 6: Protect Your Family from Hardship

In last article, we discussed overcoming problems and things we can do in order to better sick to a budget. I challenged you to review your budget, and decide on steps to take as a family to stick to that budget. In this article, we will discuss things we can do to help protect ourselves from the inevitable financial problems that come up.

The Worth of Time

Whether the time available in a day, or the time available in a lifetime, we all have roughly the same amount. This precious gift is limited and we can do little to reclaim wasted time. Once it is spent, whether in insulating your attic, skipping stones with your 8 year old boy, or wasting it on video games and porn, we cannot get it back. Our youth is spent, we are no longer able to do the things we used to.

We have a similar situation throughout the day. Only so much can be done before bedtime. Are we doing the things which matter most?

The old adage, “Early to bed, early to rise, makes a man healthy, wealthy and wise” rings true. But merely getting up in the morning to lounge around and get a cup of Starbucks is not the key either. When you wake up in the morning, get up, get dressed, and get going. Start off by nourishing yourself, physically and spiritually. Have breakfast, exercise, and scripture study. Then, make a list of things you want to or should accomplish that day.

To make an effective list:

  1. List tasks. Start off by brainstorming and think of what you want to accomplish, this may include fun things, if it is time well spent with others.
  2. Pray for guidence, clear your mind and commit to do your best.
  3. Set priorities. Ask yourself what is most important. Put a 1 by most important, 2 by second and so on.
  4. Set goals on what you want to accomplish, work hard at them throughout the day.
  5. Report. At the end of the day, write in your journal how you felt about your task list.

My wife started this pattern, and after relearning this through writing this article, I will start this. (Must have been dosing during the seminar at this point.) I noticed my wife has had more effective days while I was at work. The house has been cleaner, more repairs made, and food is usually on the table when I get home.

“If Ye Are Prepared Ye Shall Not Fear”

Being prepared in case of hardship is a fundamental thing you need to do to not only protect your family, but to have your wife and kids feel secure. In order to accomplish this, the first two steps we need to do is 1) Develop a one-month emergency fund and 2) Acquire adequate insurance. Note in the diagram above, creating security comes before paying off debt. Safety is paramount, and it helps with your wife’s sanity. Joblessness or a sudden major bill can create headaches fairly quickly.

Have a one month emergency fund. We try to carry a minimum $5,000 balance in our checking account. Others will have a dedicated savings account, a CD, cash or gold stashed away, How you do it is up to you. We keep it in our checking account to minimize stress on the day to day spending. But, for other families, this may not work. The temptation to spend remains there.

If you have debt, you may be tempted to pay that down before building an emergency fund. While it may look good on paper, it does expose yourself to more hazard. There is a single woman in our class who has health issues such as migraine headaches and other stress related problems. I was talking with her the other day about this. She goes on to say she has been focusing on paying off her credit card debts she acquired through medical costs. While talking about this, we came to the conclusion that if she created enough of a cushion, perhaps her stress would decrease, along with her medical bills.

Acquire Adequate Insurance

Insurance is thought of as one of those necessary evils that we all have to pay. What kind of insurance, how much insurance you need, what your coverage is, and what sort of deductible you are willing to pay all plays a part in your insurance decision. Property insurance such as homeowners, automobile, business or renters, insurance can help you recover costs incurred in the advent of an accident, fire, theft, or whatever. Health insurance (now required) can cover the costs of routine health care, or with high deductible plans, be there primarily for major illnesses. Life insurance provides the family with a sum of money if one dies. Disability insurance, like life insurance will cover a person who has a life changing accident.

There are two costs to an insurance policy, the premium (base payment to keep policy), and the deductible (amount of money you pay before the insurance company helps pay the expenses). With these, you can perform a cost-benefit analysis based on your risk:

In this example, you are comparing a high deductible health plan with a low health deductible plan. One has a $120 annual premium with a $2,000 deductible, the other has a $480 annual premium with a $500 deductible.

Annual Minimum Cost Annual Maximum Cost
High Deductible 120 2120
Low Deductible 480 980


Notice in the best case scenario, the High Deductible will save you (480-120) $360. In the Low Deductible, the worst case scenario will save you (2120-980) $1140. Ask yourself two questions:

  1. Are the chances of me running up to worst case scenario greater than ($360/$1140) 32% ?
  2. If I do run up to worst case scenario, do I have enough emergency funds to cover it?

My boss’s wife had to have a heart transplant. For him, the low deductible plan makes sense. The annual medical costs will surely run up to the deductible. For our family we are fairly healthy, so we typically get a higher deductible, however that has bit us a time or two.


This week, I would challenge you to sit down with your wife and discuss a reasonable savings goal and start working toward it. Also, do the above exercise with your insurance and see where you fall with actual numbers. This is very important when choosing insurance. I hope you are still keeping on top of your budget and updating often.

Author: Jim Johnson

As a man in his early 40's, I grew up on a dairy farm in an irreligious home. Disgusted with the choice of women out there, I looked into religion to find a worthwhile mate. At 23, I joined the LDS (Mormon) faith, married, became a civil engineer, and now have six children. My favorite things are puppies, long walks on the beach, and the color blue (not really).