As a parent, the joy of holding your baby in your arms for the first time is beyond words. It marks the start of heartwarming milestones that will leave your heart full of love. Parents watch their children smile, take their first step, and say the first word. All in all, they change your world in both good and uncomfortable ways. But they are all worth the trouble.
Once you have children, your priorities also change drastically. Instead of putting yourself first, your baby comes first. After all, every parent strives to give their little ones all love. Therefore, instead of throwing money on friends’ night out or weekend getaways, you must focus on the baby’s needs. Believe it or not, you will derive pleasure and a sense of joy from pleasing your little one.
While many parents give their children a good head start in life, what about their future? As the world changes, securing your child’s financial future is essential. It includes investing in education, opening savings funds, and getting health insurance. If you are a new parent and don’t know much about this, have a look below. Here we have highlighted five ways to secure your child’s future financially.
- Prepare a Will
In today’s day and age, parents don’t pay much importance to preparing a Will. It doesn’t matter how much your net worth is; you have to create a Will to safeguard your children’s future. If you are incapacitated or dead, your relatives might come running to acquire your wealth. After all, humans are greedy. Having a Will would ensure your children don’t have to fight with relatives over property disputes.
However, you can name a guardian in the Will if your kids are underage. The guardian will administer the estate independently once your children reach the age of 18. Lastly, appoint a caretaker for your children who you trust blindly.
- Purchase Health & Term Insurance
The second step to securing your child’s financial future has a solid insurance plan. You must ensure your children are protected under a reliable health and life insurance plan. Before choosing a plan, you have to go through all the terms and conditions to determine how it will affect your children. You have to make sure the insurance plans cover all chronic and acute illnesses. A solid insurance plan will give you peace of mind, knowing your child’s health expenses are covered.
Many people think getting life insurance is like inviting death over themselves, but that’s not true. No one lives forever; hence, life insurance is a way to ensure your little ones are provided for in case you die. Life insurance is mandatory if you are the sole breadwinner of the house. It will cover short- and long-term expenses, securing your child’s financial future.
- Establish a College Fund
With every passing year, school and college fees are skyrocketing. These expenses can become a massive stressor if you don’t plan for them. Hence, establish a college fund and pool a small percentage of your income. Putting some money aside will ensure an adequate sum of money is available when your child has to go to college. In addition, it will free up space for your retirement savings.
Moreover, you can also get an education policy for your child. It will give you a better chance to save for education. Then, if something happens to you, your child will still have access to the full benefits of the fund, allowing them to complete their education. The best time to buy an education policy is when your child is born. It will give you sufficient time to save and lift the financial burden from your shoulders.
- Teach Financial Literacy
Unfortunately, financial literacy or money management isn’t a subject at school or college. But it is an essential life skill that everyone should acquire in their growing years. Therefore, you have to teach your children how money works. It will help them make sound financial decisions later in life. Begin this lesson by giving your kids a small piggy bank. You can explain to them the importance of saving money through this. You have to explain how the money inside their piggy bank is for their future; hence, the more they save, the more it will grow.
Besides this, don’t hesitate to involve your children in financial matters. It will allow them to learn about money management while training them to develop financial responsibility. Moreover, if these habits are built-in children’s early growing years, they are likely to continue in their adulthood.
- Open a Custodial Savings Account
Nowadays, many local banks allow children to open their bank accounts. It promotes the concept of savings while providing children with financial awareness. So, how does it work? As a parent, you have to open a custodial savings account and put a small amount of money for your child. Similarly, you can set up a Junior ISA account on your child’s behalf. Here, you can choose to invest in stocks or cash, as all proceeds are tax-free income and capital gain.
The account will automatically get converted to a standard ISA account once your child turns 18. However, the stocks and shares in ISA are subject to volatility at times. Thus, only opt for this account if you are willing to take the risk.
Final Thoughts
Every parent wants the best for their children. Similarly, every parent’s goal is to secure their child’s future, especially in today’s uncertain times. For that, you have to start planning ahead of time. For example, you have to draft a Will and purchase different insurance policies. Simultaneously, you have to teach your child the importance of money management and basic financial literacy. It will allow your children to make informed financial decisions once they grow up.
