How to Financially Prepare for a Funeral

Posted on Sunday 06 May 2018

When we think of financial goals, we often think about the exciting things in life. A family home, an overseas trip, starting a business, preparing for the holiday season, or perhaps even our dream car.

The reality is, financial planning is just as important for the opposite things as well. Things we never want to think about. Like for our own death, funeral or unexpected emergencies.

Death is inevitable and the sooner we all become okay with this fact, the better. As you get older, there will be a time where you will have to setup your will and even plan for your own funeral. Not the best thing to discuss but with quick planning, you can overcome this process.

The average funeral can cost between $7000 and $12000, so creating the right plan can greatly reduce the burden on your loved ones. Regardless of your age or resources, here are some ways to financially prepare for a funeral.

Plan your funeral and budget in advance

Hopefully you’ve never had to organize a funeral before. It's amazing how shockingly low number of people actually plan their own in advance. Who wants to do that anyways? Either way, you may be stunned by how many decisions (and expenses!) are a part of the process.

It may sounds morbid to plan your own funeral, but having a general idea of proceedings will help you estimate a budget and make the decisions easier for your family. After all, it is them who will be going through an incredibly rough time.

Costs can include the funeral home service, embalming fees, and the varying prices of a casket. You’ll also have to decide whether you want to be buried, cremated, or some other eco-friendly option.

By making a plan in advance, you can know just how much money needs to be set aside, and you can be sure that your funeral will be a true reflection of your wishes.

Prepay for your funeral plan

Death and taxes are a certainty in this life, and unfortunately, so too are the rising costs of funerals.

Burials are becoming increasingly expensive due to land shortages, and general service costs are rising due to inflation. An advantage of prepaying all or part of your funeral is locking in a lower price.

However, choosing to pre-pay at a specific funeral home can come with drawbacks as well. There are generally no refunds. So if you move away from the area, your plan may not be so convenient after all.

Also, if the company goes out of business, you may not be able to recover your money. If you decide to prepay, these are the scenarios you should be asking prospective funeral service providers about.

Life, funeral or end-of-life insurance

Having some form of insurance is a great idea, especially if you have family that would be left with a financial burden when you pass.

The types of insurance marketed today include burial insurance, funeral insurance, end-of-life insurance (Which would cover extras such as medical and credit-card bills), term life insurance (For a fixed number of years) or permanent life insurance (That will cover you until the end of your life. Funeral included). Insurance in general just comes in handy you know.

The huge range of options will require a lot of research to decide what is the most appropriate for you and your family. For example, if you’re relatively young and healthy with dependant kids, a more thorough life insurance policy may be a better choice. Versus someone older whose kids are grown up and financially independent.

Specific savings account

If you prefer to save funeral funds yourself, it’s a good idea to create a separate account that you can regularly top-up over your life. The advantage of a savings account is that it can procure some decent interest over time. This is a good long-term, low-risk option. It’s important to name a financial beneficiary that can access this account when the time comes.

Create a will and keep records up to date

While the funeral is one large cost at the end of your life, there will always be loose ends to tie up. By creating a clear will and keeping it up to date, the enormity of the admin will be manageable for your next of kin. Make sure to communicate all necessary details to your loved ones. From burial preferences to account numbers, take the time to get your affairs in order.