As a parent, our goal is to ensure that our children are reared into successful adults.
Though success has a myriad of definitions, ultimately, we want them to be positive contributors to society.
Furthermore, we want them to experience a much better life than we may have had.
A significant factor in ensuring that we are able to accomplish these goals is laying a positive financial foundation.
Money is a huge part of our ability to give our children the best that life has to offer.
So in order to give them a brighter future, we must do our part by making the best financial decisions.
You may not have known how to financially prepare for having children, but in this post, I’ll share five things that you can do going forward to secure your child’s future.
1. Get Life Insurance
Though the hope is that we all live long, full lives, the reality is that we have to prepare for the unexpected.
No matter what, our job is to ensure that our children are taken care of financially—even in our absence.
The best vehicle for ensuring so if by getting life insurance.
Life insurance provides the financial means for your family to cover end-of-life expenses and lost income in the event of your passing.
It provides the assurance and peace of mind that your children won’t have to worry about money.
There are many options available for coverage, that provide different benefits.
Regardless of which type you choose, choosing one is the first step in securing your child’s future.
2. Create a Will and Estate Plan
The next step in securing your child’s future is by having a plan that can be executed in your absence.
The vehicle for that is a will and estate plan.
The common misconception about these legal documents is that you must be wealthy to even need them. But here’s the truth: An estate plan and will don’t have a minimum net worth requirement!
Put a plan in place that will dictate how and where your assets will be distributed and who will care for your children.
Security comes with having a plan, so create one.
3. Get Out of Debt
If you want your children to experience a full life, let them experience a life of debt freedom.
Teach them that they can experience life without worrying about creditors or lenders. Show them that they can live life without financial worry or strain.
You can do this by taking steps to get out of debt.
Getting out of debt is not only a gift to your children, but it is a gift to yourself.
If you can become financially free, you have the freedom to give them experiences that debt may have held you back from.
Not only that, but you won’t burden them with the inheritance and consequences of your debt and financial mistakes.
That is a gift that every parent should want for their children.
Getting out of debt requires you to do four things.
- Get on a budget. This is the plan that you have for your money. Use it to allocate your funds in a way that aligns with your financial goals.
- Reduce your spending. Debt typically comes from spending beyond our means. So to free up cash to pay off debt, you must reduce your spending down to necessities.
- Increase your income. The quickest way to getting out of debt is to make more money to put toward it. Consider picking up a side hustle, starting a business, or even negotiating a raise to help you reach your goal.
- Don’t create more debt. It should go without saying, but if you want to get out of debt you have to stop creating it.
4. Start Saving For Their Future
Becoming debt-free will allow you to free up cash to start saving for your child’s future.
That future can be college, opening a business, or even becoming a homeowner. Whatever path they take, having funds available to support them should be your goal.
Even if you aren’t completely debt-free, open up a savings account for your child and begin depositing what you can.
A great way to remain consistent with saving is to take part in a savings challenge.
These challenges are fun ways to hold yourself accountable for putting money toward your goals.
Don’t feel discouraged if you don’t have a lot of money to put aside at first. Just remember that a little is better than nothing.
5. Teach Them About Money
It may sound a bit cliche, but the best gift that we can give our children is the gift of knowledge.
Although we may not have been taught how to manage money, I believe that it is our responsibility to change the narrative and teach our kids.
The best way that we are able to teach them is through our own actions.
Allow your kids to sit down with you while doing your family budget.
Include them in your debt payoff journey and show them how they can help the family reach its goals.
Take them to a local bank and show them how to open a bank account.
Teach them how the economy works by paying them for the work that they do around the house.
Whatever creative way that you choose to teach them about money, by all means, teach them.
That knowledge that you impart will allow them to make better financial decisions in their adulthood.
We have the ability to shape our children’s futures.
Being financially responsible is one of the most important ways of shaping a future that is positive and promising.
With these five steps, you will be on the path to securing that kind of life for your child.life for your child.