A family’s biggest dreams are rarely achieved by one person. Buying a home, educating children, starting a business, building investments or preparing for retirement often requires years of shared sacrifice, discipline and planning.
Yet financial responsibility is often left to one person, usually the primary breadwinner. This can leave the entire household vulnerable when illness, job loss, disability, death or another unexpected event disrupts the family’s income.
Financial planning is therefore not simply about how much an individual earns or saves. It is about ensuring that the people who depend on that income, as well as the dreams they share, remain protected when life does not go according to plan.
For Mushieni Indakwa, a pupil specialising in insurance, commercial, and litigation law at Wangai Nyuthe & Company Advocates, sound financial protection should begin with considering the needs of the people who depend on the family’s income.
“Families should consider insurance protection for the principal members of the family, including spouses and children, depending on their circumstances and the terms of the particular policy,” he says.
For children, the applicable age of dependency can vary depending on the policy, with some arrangements extending beyond 18 years for children who remain in education.
Make your dependents and beneficiaries clear
Having financial protection in place is only part of the equation. Families also need to ensure their arrangements are clearly documented so intended beneficiaries can access benefits when they are needed.
Indakwa stresses the importance of clearly identifying dependants and beneficiaries in relevant policy and estate-planning documents.
“Families should make sure that the dependency of beneficiaries is clearly established and that their details are properly captured in the policy,” he says.
Where a beneficiary is a minor, families should consider appropriate arrangements for managing benefits on the child’s behalf. This may include arrangements made through a will or another legally recognised mechanism, depending on the circumstances.
Parents should also keep insurance policies active by paying premiums as required and making appropriate arrangements for continued servicing of financial obligations where necessary. Protection that lapses may not provide the security a family expects when it is needed most.
Prepare for the unexpected
A family’s financial plan should not only ask, What do we want to achieve? It should also ask, What could prevent us from achieving it?
A family may save diligently for a child’s education, for example, but the sudden death or disability of the parent funding that education could significantly alter the household’s financial position. Similarly, a major illness could consume savings intended for a home, business, or other long-term goal.
Read More: The Hidden Cost Of A Medical Emergency
For families with children, Indakwa particularly highlights the importance of health insurance.
He says, “Health insurance is important, especially where children are involved. One illness can wipe you out.”
Beyond insurance, he recommends maintaining an emergency fund to cushion families against unexpected financial shocks. The experience of the COVID-19 pandemic, he notes, demonstrated how quickly circumstances can change and why households should prepare for situations they cannot predict.
Indakwa also encourages families to invest, with the choice depending on their financial goals, circumstances and ability to manage risk.
Understand what you are signing
Financial planning also requires families to understand the legal commitments attached to the financial products they purchase.
An insurance policy is a contract, meaning both the insurer and policyholder have rights and obligations under its terms. As a lawyer dealing with the regulatory aspects of insurance, Indakwa advises policyholders to consider appropriate legal advice when entering into insurance arrangements, particularly where a policy involves complex terms or significant financial interests.
“An insurance policy is a contract in nature,” he explains. “You need legal assistance when the policy is breached, when the policy is cancelled, denied, or delayed.”
Understanding a policy from the beginning can help families know what is covered, what exclusions apply, how premiums must be paid and what procedures should be followed when making a claim.
Don’t spend today as though tomorrow doesn’t matter
Perhaps one of the biggest threats to a family’s financial security is not an unexpected event, but a lack of planning.
Indakwa says one challenge he observes is families spending their income without a clear blueprint for the future.
“Families are living like there is no tomorrow,” he says, pointing to the tendency to spend income rather than allocate it towards future needs.
A household can have a good income and remain financially vulnerable if most of it is spent without saving, investing or preparing for emergencies.
Financial planning does not mean families should stop enjoying their money. It means spending should happen within a broader plan that leaves room for saving, protection, and investment.
Read More: 27 Years in Insurance: How Families Can Secure Their Future
Build a wider financial safety net
A family’s financial plan does not have to depend entirely on a salary. Indakwa encourages families to consider other avenues that can support them during periods of financial difficulty, including SACCOs and chamas.
Such structures can provide opportunities for saving and investment and, depending on their arrangements, may offer members financial support during challenging periods.
However, families should understand the terms, obligations, costs and risks associated with any financial arrangement before committing their money.
Ultimately, financial planning is about more than accumulating money. The savings account may represent a child’s education. The insurance policy may protect a family’s stability after losing an income earner. The investment may represent a parent’s retirement.
These are the dreams behind the financial decisions families make.
When families understand their financial position, prepare for risks, communicate about money, and put appropriate protections in place, they create a stronger foundation for dealing with uncertainty.
No family can predict everything that lies ahead. But it can prepare for some of the consequences.
Because the dreams a family spends years building deserve more than hope. They deserve a plan.
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