Having a child comes with a whole life change, because you are no longer just providing for yourself, but another human being as well. This is also true financially, you can’t just think of your future anymore, but your child’s as well. It is crucial to your child’s future success that you start financial planning early on in your child’s life. Here are four ways to financially plan your child’s future to make sure it will be secure, and that their transition to adulthood will be smooth.
Create a Savings Plan
In this economy it can be extremely difficult to save money, but as long as you budget wisely you can save a few dollars here and there that will make a huge impact on your child’s future finances. It is a good idea to use ISAs, which offers a tax-free way to save your money. Although interest rates are not high at the moment, ISAs still offer a secure way to save and a decent return. Saving for your child’s future, especially when it comes to education, will massively reduce their debt once they enter the real world.
Create a Will
You can never make a will to early, in fact the sooner the better, because you never know what life will throw your way. Creating a will ensures that your child is taken care of financially, and that they don’t have to take a lengthy probate route to have access to your estate, which usually takes years if you did not create a will. It is important to realize that children are not automatically given your estate upon your passing, which is why a will is so crucial if you want to ensure your child’s inheritance is given smoothly.
Get Life Insurance
Life insurance is a way to ensure that your child can continue his or her life without fear of their financial future when you have passed away. Having a life insurance policy will fund your child’s living expenses, and guarantee that whoever is taking care of your child will have financial footing. It can even fund financial obligations such as your child’s college expenses.
Pay Off Your Mortgage
Mortgages are often the biggest liability that you have, and paying it off as soon as possible is extremely beneficial. If you pass away, by paying off your mortgage early, you will ensure that your child is not left with your bills, and forced to pay off the mortgage using your estate. Once your child has flown the coup, you may want to consider helping them afford their own house by downsizing your home to provide them with liquid capital.
*Thank-you to Dave Smith for this great guest post!*
Michelle Elizondo says
I agree with all the recommendations above. This is the best way to create a stable future for your child as well as yourself.
Krista Bainbridge says
Getting a will is super important because you never know who will show up to claim what should belong to your children. There are free online programs to write up your own and then take it to your local bank or credit union and get it notarized. Easy peasy!
Emilee Roberts says
Definitely! You would imagine how surprised we were when Joey got cancer at 25, and we had 2 young kids and expecting our 3rd. We didn’t have a Will yet. Big mistake! At that point, it was hard to get it done because he needed surgeries and such, so time was limited. So I’m all for just doing it BEFORE you feel like you need one!!