A different kind of insurance

History has been made...last week a sweeping health-care reform was passed. And whether you benefit (children being on parents' insurance until age 26), or lose out (business owners required to provide minimal amount of health insurance), the end goal should be to build wealth over your lifetime. When you build wealth by simply spending less than you make and saving the rest, then self-insurance isn't that far-fetched.

Self-insurance is described as a way of managing risk by minimizing insurance expenses and cash flowing "predictable" future losses. In many ways becoming self-insured is the only way to not be tricked by insurance companies. "Tricked" as meaning higher than average premiums/deductibles for differing levels of income earners. Although it is rare that anyone becomes exclusively self-insured, coupling minimum insurance policies with responsible financial management will indeed allow you save and invest more.

Insuring your self, or senior family member, will especially come in handy if you incorporate it early on in your financial planning. Incorporating early can help to afford the $10,000 a year health care for the elderly (whether nursing home or in-house nurse) and not have to go deep into debt in the process. Another way to self-insure against the cost of health-care is to save dollars in tax deferred or tax-free financial instruments. In states that don't have a state income tax, investing in short term municipal bonds. Municipal bonds will give a tax advantage while also allowing cash to grow faster than if it were in regular savings accounts. The taxes on interest is the exact same federally but with municipal bonds (in states without state income tax) you typically earn a higher rate of return than with commercial banks.

There are many other ways to plan financially for proverbial "rainy" days, here are just a couple of ideas to get your brain moving. With simple research into all of the different ways to grow your money, along with a knowledge of how these paths affect your taxes, you can create a customized savings and allocation plan that fits your family's needs.

Creativity in your planning is a must have. There are some forms of investing for the future that require outside-of-the-box thinking in order to hedge against unexpected losses.