January 17, 2017
The last thing parents of young children want to think about is their children growing up and going away to college, but responsible parents know they need to do life planning to secure their children’s futures. There are several contingencies you’ll want to plan for when it comes to your children’s future, and making the right financial decisions for your family is not always easy. Our suggestions should set you on the path toward making your child’s future financially stable.
1. Be a Good Role Model
The first step you can do to secure your child’s financial future is to be a good role model. This means paying down your debts, saving money, and making sound financial investments. While you don’t necessarily have to share your income and investment information with your children, you should talk about money and why you have a budget and how you work to make money to pay bills instead of buying everything that you want.
Talk to your kids early on about earning and saving money and get them involved by helping them set up a small business like a lemonade stand, setting up scenarios and engaging in play that involves pretend money and shopping at home, and giving them an allowance or paying them to complete chores. Explain that earning and saving money is key to a comfortable way of life and teach them how to have a healthy relationship with money. Of course, piggy banks and checking accounts are good tools to use with kids to save their money as they grow older.
2. Use Time to Your Advantage
Don’t put off working to secure your child’s financial future until later in life. The sooner you start and get time on your side, the more money your child’s savings accounts and college funds will gain. College tuition costs also jump from year to year, so the more you put aside earlier, the better the chances that your savings and investments will cover those rising costs.
That isn’t to say that you should make hasty investment decisions. You should consider all your savings and investment options and choose those that you are most comfortable with making. Be sure that you choose an investment option that allows you to be more aggressive when your children are young and more conservative as they reach the end of their high school career. Working with a financial advisor who can determine your investment plan and your comfort levels with investing is a good place to start if you are not sure how to go about choosing college funds and savings and investment accounts for your children. They also know how to diversify funds and choose those that are more likely to keep up with inflation and increasing tuition costs.
3. Make Sure Your Will and Legal Documents are Up to Date
Another task that parents usually put off is making sure their will and legal documents are up to date. Well-written wills provide financial protection for your children and ensure their physical well-being in the event of your death. Be sure to establish a trust so that your assets are handled properly until the children become of age to handle the assets themselves. Name guardians for your children and be sure to name an executor of your will to ensure all of your final wishes are carried out as you wanted and that your children’s best interests remain protected.
It’s also important to ensure that you have other legal documents in place to handle the transfer of your property. One such document is a Quitclaim Deed. These deeds are special forms of deeds used to transfer real estate in low-risk situations. They are a smart option for parents who want to gift real estate to their children.
4. Purchase Life Insurance Policies
Many parents also often put off purchasing life insurance policies because they think they are too expensive. Young parents often do a combination of term life policies and permanent policies in order to keep initial costs down but still ensure enough cash for their families to cover end-of-life expenses and mortgage payments and other debt payments. It’s better to work with an agent and determine your budget and the type of insurance policies that you can afford for your financial goals.
The sooner you begin to secure your child’s financial future, the better. Take steps to be a good financial role model, act now, get your will and legal documents in order, and purchase life insurance to give your children a stable financial foundation now and in the future.
Image via Pixabay by alphalight1