You must put your child’s needs at the forefront as a parent. It would help if you cared for their daily needs, education, and future. You must save and invest. And if your work does not offer medical insurance, you must secure your kids yourself.
We all know how easy it is for kids to fall sick, and if you are paying cash, you will spend staggering amounts by the time the year is over. That said, securing your child’s financial future is paramount, as you don’t want them to suffer. You can do this by:
1. Pay Your Debts
You must clear your debts as early as possible as they will only incur interest which takes away from savings. Some argue that you can invest money and then use the interest to pay the debt while that is viable. Let’s say something happens to the investments and doesn’t bring as much money as you had hoped. That means that your debt keeps on piling up. So it’s better to clear your debt and start saving and investing.
2. Work With an Accountant
Better yet, consider working with an accountant. Yes, it’s an extra cost, but it will save you more as they help you make intelligent financial decisions. For instance, they can help you cut on some expenses that are not bringing value into your life and direct that money into your emergency fund savings.
3. Invest
Invest your money in passive investments such as the stock market, real estate, or app-based Robo investing. This means you will earn money with your investments, which you can spend or pump back. This helps create a secure financial future for your kids.
4. Irrevocable trust
You can also use irrevocable trust, ensuring that only your child is the recipient at the right age. Using a trust to avoid estate taxes is the best way to safeguard your child’s future. The best part is even you, as the parent, have no right to access the funds. The trust owns the money and is distributed to the heirs upon your death.
5. Save For Their Education
Education is critical; therefore, you should ensure that your kids have the means to access education. You can purchase insurance premiums for their high school and higher education fund.
The best part about these long-term saving plans is that as long as the money invested remains in the accounts; it is not taxed, allowing it to grow exponentially. Another long-term saving plan is personal retirement.
6. Money Management Lessons for Kids
That said, you can save millions or billions of dollars for your kids, but if you don’t teach them money management from a young age, it will be a waste. This is because they will squander the money, and within a year or few years, they have nothing to their name.
● Teach Them About Money
It would be best if you taught your child about money when they are as young as 4. Assign them minor household tasks, such as making their bed, taking their place in the kitchen after eating, and wiping the table. Assign the reward (money) depending on the task.
Get them a clear piggy bank to see as the money grows. And when it comes to spending. Apply the 80:20 rule, where they can spend 20% and save the rest.
● Support Their Endeavors and Encourage Them to Invest
If your child wants to start a YouTube channel or make necklaces with beads to sell, encourage and even support them. This will instill a sense of confidence. We see kids as young as seven become movie stars, and others have their doll line. This is because their parents did not dim their lights. Instead, they encouraged and supported their dreams.
● Encourage Them to Read
When teaching your kids about money, you must encourage them to read financial books. Not the complicated ones, get the simple English such as “If You Made a Million” and “Everything Kids Money Book.” These books teach kids how to earn, save, and invest.
You can find a money-based book for kids from the age of four. And advance their learning as they grow.
● Involve Them in Money Decisions
When making decisions about money in the family, have your kids voice their opinions. This will give you an idea of how to go about teaching them to make financial-based decisions. It will also give them an insight into how you budget for your expenses, savings, and investments.
● Teach Them to Work for What They Want
Just because you have the money doesn’t mean your kids get everything handed to them. Rather teach them to work for what they want. For instance, have your kid pick one part-time job over the weekend. They can also take up tutoring, which is better as they will also be revising their courses.
This will teach your child survival skills and take charge of their life; instead of waiting for you to provide everything. You’ll find that such kids have a higher percentage of starting a successful business as they were exposed to the working environment from a young age.
● Teach Them about Gratitude
No matter which stage of life you are at, you must be grateful for everything that you’ve got.
For instance, if their ventures fail, teach them that there are both successes and failures in business. And in all, you must practice gratitude, view everything as a lesson, and above all, be positive. Because with the right mindset, you’ll find it easier to pick yourself up and try again.
● Giving Back to Society
Yes, you’ve taught your kid how to make money, save and invest, but did you teach them about giving back to society. This is because the hand that gives is the one that receives. Teach them about donating part of their earnings to children’s homes and other places that need the funds.
Final Thoughts
As we’ve seen, saving and investing to secure your child’s financial future is crucial, but what’s more important is teaching them how to earn, save and invest. Because only then will you be sure they’ll not waste their inheritance.
With the above money management tips, your child’s financial future is secure because even if you don’t leave a massive inheritance, they can create wealth.
