Originally Posted On: https://www.iquanti.com/
If you have kids or are soon to become a parent, one of the things that’s sure to cross your mind is how you will plan to provide for them. It’s more than just putting some money away in a savings account–the financial future of your children is built with tools and habits that range from budgeting to using different types of life insurance.
- Start saving early
Some parents like to open a savings account for their child at birth. Others do the same with a 529 plan to help plan for college. No matter where you’re putting your child’s savings, it always helps to take advantage of time. The more time the savings have to grow, the larger they will become.
You can set yourself a weekly or monthly savings goal to help build a good nest egg in those accounts. By the time your child is ready to use it, they will be grateful for your efforts.
2.Teach them how to save
Saving habits can start at any age, and the earlier children learn to save, the more likely they are to carry the healthy habits with them for the rest of their lives.
You can start by giving your children a small allowance, and can encourage them to save their money and put it towards a “long term goal” such as a toy.
Creating a game out of the lesson can be a great way to help your children build a lifelong habit. They can learn to reach their savings goals and feel rewarded from doing so, all while avoiding distractions like buying a snack every time the ice cream truck passes by.
- Consider their life insurance options
Getting a life insurance policy for your child can help ensure that they will have access to affordable life insurance throughout their life. In other words, you are protecting their insurability. Getting a life insurance policy for your children early in life also gives your children a head start on accumulating cash value, which can accumulate faster if the company pays dividends. Some companies do and some don’t, and dividends are not always guaranteed, but receiving them can certainly be a welcomed bonus.
Here’s how dividends work: a company pays dividends based on its performance throughout the year. If a company does better than expected, they will pay dividends to shareholders and/or its own customers.
By getting a child a life insurance policy while they’re young, you are giving them an option of keeping a life insurance policy with a locked-in premium rate for the life of the policy. This can be advantageous, as premiums tend to increase with age. Your children will also have the benefit of accumulated cash value, which can help them at any point in their lives.
The bottom line
A child’s financial future is so often shaped by their parents, not just in terms of how parents set them up with the right tools and accounts, but also in the habits you help your children build under your guidance. Be sure to consult a financial advisor about your best options when it comes to planning for your child’s financial future.