If your family is on the younger side, with you and your partner raising infants or toddlers, then you must know how big of a part financial planning must play to secure your children’s financial futures. It’s never too early to plan for their education and the wealth you can leave behind, especially since a 2020 study found that more than 56 percent of college students said they could not afford their tuition fees. If this is not the future you want for your kids, now is the time to take action.
If you have young children and are thinking of ways to give them a secure financial future, here are the steps you can take.
Open an education savings account
One of the first things you need to do for your kids is start a savings account solely dedicated to their education. Some education savings account enable parents to deposit a maximum of $2,000 every year, which will go directly to your child’s college fund. Still, they can also go to your kids’ elementary and secondary school expenses. Some plans allow your funds to grow tax-deferred, and if you want to invest more than $2,000 annually, look for a plan that does not have a yearly limit. When thinking of your children’s financial future, their education must be on top of your priority list.
Consider starting a family business
Another thing you can consider is starting a business you can pass on to your children eventually. If you’re thinking of investing in something like a lawn maintenance franchise, that’s a good start because it means you’re thinking of investing what money you have in something that can grow. One of the best things you can do for your children is leaving them a legacy that they can help cultivate and grow for years to come. Here are some tips when deciding on the type of family business you can start:
- Think of a business with a low overhead cost. Franchises can be a great idea because everything is largely already set up for you, and you need to adopt an already established business strategy, brand identity, and other factors in business that you usually need to think about when starting something of your own. Franchising is so much more convenient because you don’t have to start from scratch.
- Understand the cultural moment when thinking of a product or service. What does the world need right now? In the pandemic, we’ve seen that people really needed more delivery or courier services, as well as businesses that offer day-to-day services like laundry, lawn maintenance, and others. Elderly or senior care is also something that you can always find a market for.
- When starting a family business, remind yourself that it’s not something you should force your kids to be part of. Observe who is most business-minded and interested among them and nurture that desire instead of putting so much pressure on everyone to be part of it. The last thing you want is to raise resentful adults who never had the chance to pursue what they really wanted to do.
A study found that 29 percent of Americans lost their health insurance at the height of the pandemic, while more than half of Americans remain uninsured this year. If anything were to happen to you—the person who is the primary wage earner in the family—your children will have difficulties paying the bills and surviving day-to-day, especially if they’re minors. If you’re delaying life insurance because of its perceived cost, think of how much it would cost your family if you didn’t have a fallback and something happened to you. Life insurance may seem like an additional cost, but think of how much you would be willing to spend to help protect your family.
Save for retirement
And lastly, one of the biggest things you can do for your kids is to ensure that they never have to worry about you in your twilight years. While it would be a blessing to have kids who can help give back everything they’ve been given, it shouldn’t be a requirement. Save for your own retirement so that your kids don’t need to provide for you financially when that time comes. If you have a job that offers a 401k plan, have a set amount deposited directly into your retirement fund. The sooner you start, the more you’ll have time for your retirement money to grow.
Having kids is one of life’s biggest blessings, but it’s also a big responsibility. Do all that you can to help secure your kids’ financial future and teach them the value of building something so that you never have to worry about their future.