My wife went away for a couple of days last week. The first night she was gone, my 7 year old daughter was upset that her mum wasn’t there. The second night, my 10 year old son was quiet and withdrawn. He was missing his mum too. What if this was more permanent and they were kids who had a parent who died?
I have written before on the pure loss of income from the death of a spouse but today I will look at how dealing with the emotional side of death can impact on your finances.
I worked at home for the two days so I would be there when the kids got home from school. I am not as productive when I work from home. There are domestic distractions such as putting on the washing or hanging it up when it’s finished. Then there’s helping the kids with their homework and getting them something to eat afterwards. As a consequence of not being as productive, your income will be lower.
If there is a loss of a parent, you are going to work less for a while so you can be there when your kids come home from school to make sure they are alright, especially if they are young kids. Unless you have a very considerate employer who will give you lots of paid leave, you will need to make up for this reduced income while you are working less.
There will be a time though when you will have to go back to work on a full time basis and you will have to pay for after school care. There are enough reports in the newspapers about the ongoing costs of child care in this country. That will have to be paid for.
Even if your children are in secondary school and can look after themselves after school, they are at an expensive time in life where not wearing the correct brand of clothing can result in days of slagging from their peers. So don’t think that because you don’t have child care costs for your kids, life will be less expensive. The demands on money will still be there, it will just be for different things.
If a child is upset, you might give them a treat to take their mind off things. Now, imagine what a child is going through with the loss of a parent. Imagine what you are going through with the loss of a spouse.
Spending money gives us a temporary endorphin rush and helps us get our mind off things. You would like to be able to make big purchases to make your kids feel better or go somewhere exciting to take their mind off things. Or what is more likely to happen is that you will spend the money anyway, maybe paid for by credit card and pay it back over time at 25% interest.
By having a life cover plan in place, you get a big lump sum of cash (there are also plans that pay a monthly income) in the event of premature death. It is something that we all hope that we will never get a use out of. And for most people, you never will. But if we find ourselves in a situation where a spouse has died, you want to be in a situation where you don’t have to think about money.
Life cover is pretty cheap. A 40 year old couple can get life cover of €250,000 each for €56 a month. That’s less than €2 a day, you wouldn’t even get a cup of coffee for that price.
If you have any questions, send me an email at steven@bluewaterfp.ie