When it comes to securing your child’s financial future, nothing, absolutely nothing should be taken for granted. And if you’re a parent who cares about their children’s financial future, you’ll agree that you need to do something about it. Recent statistics show that approximately 83% of Americans find it difficult to pay for college education. At the same time, 20% of Millennials earn less than Baby Boomers. I guess you don’t want your children to suffer a similar fate? Well, if that’s true, then you’ve got to start planning today. You’ll find these tips below helpful.
1. Set up an Education Savings Account
If you’re serious about securing your child’s financial future, then opening an education savings account is a good place to start. Interestingly, this account allows you to deposit up to $2,000 every year. The icing on the cake is that unlike other types of accounts which attract yearly tax charges, you don’t pay taxes on an ESA, making it perfect for your child’s education. And while most people create an ESA account to fund their children’s college education, this account is perfect for just about any of your child’s educational needs at any level.
2. Write and Keep an Updated Will
Are you serious about securing your child’s financial future? Then writing and updating your will isn’t a bad idea. Trust me; you wouldn’t want to be one of the 64% of Americans who do not have a will. In fact, not having a will already spells doom for your children. Another wise decision is to select a trusted guardian who will take care of your kids and look after your property just in case of any unforeseen circumstances. You might think it’s expensive to draft a will, but there are reputable firms that offer this service at an affordable cost.
3. Make Sure Beneficiary’s Information Is Current
The importance of always updating beneficiary information cannot be stressed enough. Information on a beneficiary’s form usually overrides details in your will. So where do you start? Well, it’s simple; always ensure that your beneficiary’s information is updated on all your accounts whether on your insurance policy, retirement or bank account. Again, this update should be done at different times, let’s say after the birth of a child or in the case of a divorce.
4. Set up a Custodial Account
Opening a custodial account is one of the smartest decisions any parent can make in this age and time. And surprisingly, this account is one of the easiest to set up. Typically, this account is opened using your child’s information and can only be accessed by your child when they reach 18 or 21. The downsides to opening this account are that it becomes taxable when money in the account has more than $950 in it. Also, your child has full control of that money when they reach the required age. Have you taught them how to be financially responsible?
5. Make Life Insurance a Must
There is no doubt that life insurance can do your children a lot of good especially when you are no longer there. That’s a real reason you should get one today. And while statics indicates that over 85% of Americans need a life insurance policy, only 62% have a life insurance policy in place. The real value of having a life insurance policy is knowing your children’s future is secured at least to a reasonable extent.
6. Open a Retirement Account
With the average social security benefit pegged at $1,180, that’s a modest monthly income to live on for your family. Saving for your retirement today will help prevent any stress on kids to provide for you financially. The sooner you set up this account, the more money you’ll be able to save for your retirement.
7. Have That Money Talk with Your Kids
As a parent, it is your obligation to teach your children financial literacy and the need to take responsibility. Learn to encourage them to take up whatever reasonable jobs they can find. Also, help them create their own simple savings plan, this way, you’re not only taking the bulk of the work off your shoulders, you are teaching your child that financial freedom comes with a lot of hard work and discipline.