Having kids is emotionally rewarding, personally fulfilling, and extremely expensive. Planning for their future is essential to prepare for contingencies and the financial demands of helping a child achieve a successful future. In addition to food, medical bills, clothing, child care, recreational expenditures, and unexpected costs, there are long-term objectives like college and weddings to plan for. The sooner you lay out a financial plan, the better prepared you’ll be for the challenges that arise at every stage of your child’s growth and development. Take a look at these financial basics or tips on planning for a child’s future.
One of the best ways to help a child prepare for the future is to teach them the value of money and how saving, smart spending habits, and generating income translates into independence and self-reliance. Help your kids establish savings objectives and show how interest and investing can help them make their money grow. Children should learn about how sales can maximize their buying power, and make absolutely sure they understand the dangers of credit card debt. After all, credit is a tool to be used responsibly, not frivolously.
Advance Funeral Arrangements And Long-Term Care
Though the discomfort of this subject may sway you to want to put it off as long as possible, planning for long-term care and paying for your own funeral right now is the ideal decision. This way, your children won’t have to endure the hardships of taking care of financial obligations making funeral arrangements for you after you pass away. There are several approaches to pre-planning, including setting aside enough money in a health savings account for long-term care or looking into using the death benefit of your life insurance policy. And if you don’t already have a life insurance policy, now’s the time to consider one; you can use an online calculator to determine your coverage and the price of your monthly rate. Whichever method you choose, let your children know about your arrangements so that they’re well prepared.
Where Will Your Money Go?
If you don’t have a will, have one drawn up as soon as possible. It’s the best way to ensure that your assets and belongings go to the people who matter most. If you pass away without a legally binding will, your family may lose any rights in the matter of your estate. A well-thought-out and clearly written will can also prevent any disputes among family members that can lead to protracted legal battles and a lot of ill will.
Most Americans have to work for a living, and a great many families have two earners. If both of you are working and there are no relatives who can help, you’ll need someone to care for your children during the day. Child day care is a very expensive proposition. Daycare facilities have a lot of overhead with expenses and insurance costs, and they definitely pass the cost on to their clients. Today, the average cost of daycare is nearly $1,000 per month and approximately $12,000 a year. Given the high cost, it’s in your best interest to begin saving for childcare as soon as possible. You’ll need the money much sooner than later.
According to the National Center for Education Statistics, private elementary school costs nearly $8,000 a year, while the annual cost of private high school stands at about $13,000. Those are daunting figures for cash-strapped families who don’t want to send their children to public schools, which come with their own costs (supplies, fees, activities, etc.). If savings or extra income aren’t viable alternatives, consider investing in real estate. You can generate income by renting a property that you own, buying and flipping a property, or investing in a real estate management trust (similar to purchasing stock). Before buying real estate, make sure you’ve done your research and know what the property is worth.
A college education is one of the most expensive contingencies that parents face. Many young people today are paying a very high price because their parents couldn’t afford to send them to college or lacked the foresight to begin saving soon enough. Saving $50 a month beginning when a child is an infant is a good way to lay the financial groundwork for college, as is establishing a 529 plan, a tax-advantaged plan designed to help families set aside money for college.
Providing a strong financial grounding for your children is an investment in their future and the caring act of responsible parents. If financial planning isn’t your strong suit, consult a financial planner or tax professional to determine the best way for you to help your children succeed.