When you have a child, you want to do everything you can to protect them and ensure they have a bright future. If you have kids or are thinking about having them, you’re likely considering what that might mean for your finances. While you do need to budget for your growing family, you can invest in your child’s financial future as well.
Beginning early with financial planning is always a good idea. Even before your child is born, you can start saving money for them for financial stability. Kids can be expensive, but it’s worth it to invest in them now. These are the smartest things parents can do for their child’s future.
Start Saving Early for Education
It’s highly likely in this generation that your child will attend a college or university after their high school graduation. Nearly 20 million students enrolled in college in the fall of 2019. The popularity and feasibility of attending college have risen over the years, and with financial aid and grants, even lower-income students have been able to attend.
Although financial aid and scholarships help students pay for college, you can help too, even well before your child is at the education level where they can attend. If you plan to help your children through college, you can set up a college savings account. This is money specifically set aside for their future education to hopefully minimize or eliminate future debt.
Teach Them About Financial Responsibility
When your children are old enough to understand money, you can begin teaching them about financial responsibility to ensure they are financially literate. The savings you put into an account for them throughout their childhood only have value if your child can understand what it means to have that money.
Teach your children about saving, spending and giving. Allow them to be part of financial talks and bring them shopping. Tell them that the money you have comes from hard work — not just from trees or your wallet. Money is valuable and should be treated as such with your children.
Plan a Budget for Your Children
You must plan a budget for your entire family. This ensures that you set up a stable future for your child. This helps you optimize your spending and saving. With a budget, you’ll be able to better provide for your child for their basic needs like food, clothing and housing, as well as any other unexpected expenses that come your way.
When you plan a budget for your family, involve your kids. They can add to the conversation, and you can ask them how you might spend your money that month. If they’re younger, you can ask them to help budget for a weekend getaway or trip to the grocery store. They’ll realize the importance of a budget and implement it into their lives when they begin to earn money.
Pay Your Own Debts
Even before you begin investing in your child’s future, you have to invest in yourself now. It’s likely the best thing you can do for your child’s future. If you aren’t financially stable, then it’s more challenging to save money for your children. Make sure you’re taking care of yourself first.
This means you should have your debts paid and have an emergency fund set in place. Additionally, you should be investing in your future, too, like with a retirement plan. If you start investing in your child and you stop investing in your retirement or future, you’ll be more likely to have to depend on them when you’re older. This sets both you and your children up for success in the long run.
Open a Child’s Savings Account
Of course, you want to start saving for your child’s education. However, opening a general savings account for your child is beneficial for their future, too. Teaching your kids how to save is crucial, and it starts with a savings account. You can open one even before you have your child in your arms.
Eventually, once your kids are old enough, you can pass along the information to their savings account. From there, they can begin to add money from an allowance, jobs or even money they receive for birthdays and other holidays. Help them manage their savings account until they are ready to take it over on their own responsibly.
Create a Will
Finally, as a parent, you need to be prepared for the unexpected. If something were to happen to you or your partner, what happens with your money, your child’s money and your child? Creating a will mitigates any confusion about what happens to your assets if you were to pass away.
This should be a top priority. Choosing a guardian that can best take care of your child is comforting to you and your child. It ensures that your child will have a promising future. Plus, if you wish, your child can be entitled to your assets, including money and material possessions.
Investing in Your Child’s Future
As a parent, you’re responsible for supporting your child in every way possible, including finances. Even before they are born, you can begin investing in their future. Start saving and continue to be financially responsible.