Every parent’s concerned about securing their children’s future financially. Our younger generation now will inherit a world marked with battles, pandemics, and global warming. How do you secure your children’s future and prepare them to handle their finances in adulthood? Today, we have seen American parents growing more interested in financial planning to secure the monetary aspects of their children’s future lifestyles. Studies indicate that a middle-income family spends $230,000+ to raise a child born in 2015 from infancy to teenage. And this estimation excludes college expenses! So, you must stay aware of some well-experienced strategies for securing your children’s financial prospects.
Protecting your children’s future financial prospects
What’s your most important responsibility as a parent? We believe that securing your children’s lifestyle financially for the future constitutes your most important responsibility as a 21st-century parent. We can see how over 80% of Americans can’t afford college expenses while millennials are earning less than the preceding generation workers. We’ve, regrettably, created an unsustainable environment for our heirs. That’s why concerned parents are always invested in the idea of securing their children’s finances. How do you ensure your kids never want for anything after your demise? The solution involves some serious financial planning. Thus, here are a few tips to secure your children’s financial outlook in the future:
1. Prepare your will
Your will constitutes one of your most significant estate planning documents. Unfortunately, we can see how most Americans haven’t created this document yet! Preparing your testament prevents the family from indulging in disorganized inheritance proceedings. When you haven’t created a will, you die “intestate,” thereby handing the distribution of your properties over to someone unknown.
Some homeowners prefer creating a trust online as well since it doesn’t have the same drawbacks a will possesses. A trust becomes actionable in your life, remains private, and doesn’t have to wait for probate. Since you can create a trust digitally now, this document ensures your children receive their inheritance without hassle. Prepare will & trust and secure your kids’ financial future now.
2. Pay your debts
We can’t stress the importance of this point; you must pay your debts to prevent your children from financial problems in the future. Clearing your debts helps your folks gain financial freedom. So, you must accelerate the payment of debts, loans, and mortgages right now. But how can you pay these debts as quickly as possible? We suggest “debt consolidation” as a strategy for escaping the confines of heavy liabilities. It combines your debts into a single account, thereby making payment easier.
3. Invest but carefully
Careful parents don’t hesitate from investing their money, but they ensure they’re investing in an eligible strategy. You can build your children’s savings by establishing investment accounts. These accounts enable you to save and make money for your kids. You may also invest in some mutual funds, thereby watching your investment grow without contributing heavily to these funds. A parent, however, should remain cautious while investing since it’s a game involving lots of risks!
4. Teach financial literacy
Don’t forget to enhance your children’s financial literacy. That’s how your descendants won’t make wrong financial decisions after your demise. In 2015, surveys found that just 57% of Americans were literate financially. Therefore, you must teach your kids about the importance of saving money. You can protect them from financial troubles by explaining how a person can grow money by saving it. In the end, you can secure their future by teaching them how to secure it themselves.
5. Open savings accounts
We suggest you establish an ESA (education savings account) to support your children’s education in the future. Called Coverdell ESAs, these accounts enable parents to deposit $2,000 each year for one beneficiary at max! Parents can leverage these tax-deferred trust accounts to support their kids who aren’t 18 yet. Learn how much can you put in a junior isa at this informative guide by thechildrensisa.com. But what should you do for depositing more than $2,000 for a kid? We do have options for such schemes. Now, you may want to consider a 529 plan that doesn’t have an annual limit.
6. Consider 529 plans
Parents can leverage 529 college schemes when they have no income level limit. Now, there are two types of 529 plans; pre-paid and savings. Parents can purchase tuition credits for their children with a pre-paid 529 plan, but they can’t buy any room with these schemes. However, a 529 savings plan allows parents to invest in mutual funds, thereby growing their investment with time. This plan offers you several investment options. So, try college plans to fund your kids’ academic future.
7. Get life insurance
Statistics indicate 54% of Americans were insured in 2020. However, more than 80% of people need life insurance today. Parents should consider getting life insurance in case some major event thwarts their plans for children. Don’t underestimate the troubles younger children can face after an unexpected bereavement. Get yourself insured against accidents to protect your kids’ future. That’s how you can protect them from financial problems arising in the future.
8. Create school funds
Education’s becoming more expensive with time, and parents should prepare to fund their children’s school/college expenses in advance. That’s why we suggest you start saving money aggressively now by establishing a school fund for your kids. These funds can support your children’s education and provide an adequate quantum of monetary investment to their academic future. Be sure you draw from these funds after financing them for 5-7 years to sustain your kids’ academic progress.
9. Update beneficiary information
Don’t forget to update your beneficiary information to ensure your loved ones are well-funded after your death. An individual must always update it after a major life event such as a birth, death, or divorce. You must also consider adding a contingency beneficiary in case the primary beneficiary dies before you.
Conclusion
Statistics indicate that 50% of undergraduates couldn’t afford college in 2020! Students are prevented from pursuing academic activities by debts/loans. Moreover, in 2019, about 70% of millennials couldn’t afford housing because of rising rental prices. These issues show that our children won’t have a secure future unless parents protect their financial prospects. So, how do you secure your kids’ future? We have described some tips to help you out! Though it all starts from becoming financially literate yourself!
Then you can enhance your children’s financial literacy. Prepare your will, and don’t forget to establish a trust for your kids. Remember to pay your debts for your kids’ financial freedom and invest for their secure future. Create school/college funds to pay for their education and consider savings accounts to protect your children from medical/academic problems. You should get life insurance while updating beneficiary information. These few tips can help parents protect their children’s financial prospects.