When thinking about preparing for your child’s future, most people think about college. But after college, then what? They will be grown after they graduate from college and old enough to take care of themselves. Suppose you taught them early in their childhood how to be financially savvy? Suppose you set up some important vehicles for your children that will help them when they are older? They are your children for the rest of your life. Parenting doesn’t stop after college. Early in their lives is a great time to show your children what it takes to be responsible financially.
Start a savings account. Take the money that they are getting for special occasions and deposit a percentage into their savings account. This will give them a sense of authority over their money while helping them learn the philosophy of saving. Explain to them they are depositing the money in the bank for their future. They will start to want to save money which forms a valuable habit into their adulthood.
Think about getting life insurance for your child. A child’s policy is inexpensive. Most parents definitely don’t want to think about life insurance for their children but consider this: You are getting the insurance for them as a starter for their life. There are many companies that have child policies that double when they turn a certain age. They can also get more insurance without insurability. This is important because your child may have some health conditions later on in life that might hinder him or her from getting a favorable rate on insurance. By insuring now, you equip your child with financial options. You should keep in mind that life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods.
Start saving for college now. There are many ways you can start. Some parents start with just a savings account. There are so many options that could maximize your money. You can open a 529 college savings plan or a Coverdell Education Savings Account. You have to do your homework or ask a financial advisor. Remember, the earlier you start the more you can accumulate. Saving some money for college is better than not saving at all.
Once you have done these steps, involve your children in their money matters. When they are mature enough you can explain their insurance policies to them. You can have them begin depositing money in their savings account, and you can have your child’s savings account to pay for their college tuition by an automatic draft. This teaches them that they too are investing in their future.
If you as a parent don’t understand finances enough to explain them to your child, contact a financial advisor or a registered representative to assist you with your financial strategy. There are many classes that can teach your children about money as well.
Teaching children about finances earlier will make them more engaged about money, savings, and preparation, and will give them a cutting edge on being financially savvy. It will be one of the best educational experiences they will ever receive from you.
Virginia Asset Management