Properly preparing your finances in the event of the birth of your child is a smart move that any responsible parent should make. But what about helping your children prepare themselves for protecting their own financial future? Making sure your kids know the right financial steps to take as they grow is just as important as simply preparing your own finances for them when they are born.
This week we’re taking a look at some ways parents can help show their children how to be more economically secure. The following are steps that will help teach your kids about the benefits of preparing for the future and while you ensure that they are set on the right financial path.
Talk Money and Get Them Involved
Don’t be afraid to bring up the topic of money with your children as early and often as possible. Start with easier to understand topics, like spending and saving money, and they grow you can get them more and more involved. It’s important to start with having conversations about finances first so they can get a basic understanding of how everything works and be more prepared for taking part of financial decisions.
The simplest way to get your children involved with finances is to ask them to help create shopping lists and taking them with you to show them the cost of food. Create a basic grocery budget and allow your child to see how the costs of certain items may or may not fit into the set plan. Another easy lesson for your child is the price of gas for your vehicle. Taking him or her to the pumps with you will show them that there is a fluctuating cost that comes with transportation.
Allowances Can be Helpful
Giving an allowance to your child can help teach him or her about the value of money and how to properly save it. Allowances, if laid out properly, will help build on your child’s grasp of finances and earning money. Don’t simply give your children money every week for no reason and allow him or her to use it as he or she wishes. Establish some ground rules to show them that money is earned and that it should be saved in order to make it last.
It can be helpful to allow your child to spend their money the first time to show them how quickly and easily it can be spent. This will help them with the idea that money shouldn’t be spent all at once and that saving for the future is more important.
A Savings Account for Their Education
Before your child is born you should be considered how you plan on helping them pay for and obtain a post-secondary education. One of the most beneficial ways to secure your child’s financial future is to help give them a chance at getting a university or college education so they can maximize their earning potential.
Since paying for a post-secondary education is expensive, it’s a good idea to plan out exactly how much you can put away for your child without hindering your family’s savings. Put away a responsible amount on a monthly or weekly basis and, if it works into your budget, raise the amount you save over time to boost the fund.
Get Life Insurance
If you don’t already have a life insurance plan in place, purchase one and make your spouse or child the beneficiary of the plan. An insurance policy is an ideal way to protect your children’s financial stability in the event that you no longer can. By making another guardian you trust the beneficiary of the plan, you’ll be ensuring that he or she will be prepared to raise your son or daughter and cover any future expenses like schooling.
You can easily get an affordable term life insurance plan that will remain in force until your child is an adult and able to begin supporting him or herself. Depending on your age and health status, you can get a useful term life plan of $250,000 from $19 to $25 a month. That amount alone is more than enough to give your children the financial protection they need during a vulnerable time of development and growth as a person.