The Family Balance Sheet Nobody Talks About: Insurance & Banking Setup for Real Life

Most families manage money like this: income comes in, bills go out, and we pray nothing weird happens.

That is technically a strategy. It’s just not a good one.

A practical “family finance” system isn’t only about investing. It’s about survivability: making sure that one unexpected event (job loss, disability, illness, a liability claim) doesn’t turn your household into a crisis management startup.

Below are two simple profiles with best-practice coverage targets and realistic cost ranges. They’re not perfect, but they are a lot better than the most common plan: “We’ll deal with it when it happens.”

 First: the rule nobody likes

Insurance is not for “small annoyances.” Insurance is for life-changing events.

If you insure every minor inconvenience, you’ll pay a fortune. If you ignore the catastrophic risks, you’ll pay with your future.

So the logic is simple:

1. Cover big liabilities (RC / third-party damage)

2. Cover loss of income (disability/loss of working capacity)

3. Cover the home and major debts (home insurance + term life if needed)

4. Only then optimise the extras

 Profile A: Couple without children (simple, but not “risk-free”)

Even without children, you still have:

• income risk

• liability risk

• home risk (if you own/rent a property)

• debt risk (mortgage, loans)

Here’s a practical baseline:

Profile B: Couple with 1–2 children + mortgage (the “life can hit hard” profile)

This is the profile where the risk math changes.

Because:

• Children create dependency

• Mortgages create fixed obligations

• One income drop can break the system quickly

Here’s the best-practice setup:

What to notice: For families, the #1 underrated coverage is often loss of working capacity. Everyone thinks about “life insurance.” Fewer people think about “what if I survive but can’t work for years?” That scenario is financially brutal. 

The banking setup that makes insurance actually work

Insurance is useless if the household can’t operate during a crisis. A clean setup helps:

• Bills account: for mortgage, utilities, predictable costs

• Emergency reserve account: no card, not “too easy” to spend

• Income account: salary in, automatic transfers out

• Optional personal accounts: small autonomy reduces friction (and dumb spending)

Automation is boring, which is why it works.

 A simple rule for prioritising (if you don’t want to overthink it)

If you’re building from zero, prioritise like this:

1. Family RC liability

2. Disability/loss of working capacity

3. Home insurance + property/tenant liability

4. Term life (if mortgage + dependents)

5. Health, income protection, extras

Not glamorous. Very effective.

 Closing thought

Most people don’t avoid risks because they’re brave. They avoid them because they’re busy, distracted, or convinced that “it won’t happen.”

That’s not optimism. That’s just a budgeting style.

If you’d like, you can adapt these tables to your real situation by swapping in:

• household monthly essential expenses

• mortgage outstanding

• number of dependents

• main earner income share

Because a plan is only useful if it survives contact with reality.