As Mom’s we are all aware of the daily needs of your child however there are ways to prepare for your baby’s financial future. Daily we change our baby’s diapers, feed them, put them down for naps and play with them. Considering the financial needs of your baby in the present and future are also very important.
Prepare for Your Baby’s Financial Future
You may be thinking that a baby is a big expense and how will you cope with the finances to support them. In this blog, we will be sharing ways in which you can prepare for your baby’s financial future in advance.
Become a custom to saving
There are many times in life where we can’t predict the future. However it’s very likely you’re child will need money for college or a car or wedding. This is why its important to become a costume to saving early.
Saving around $10 a week and transferring it to a savings account is a great start according to Farnoosh Torabi a financial expert at Nerdwallet.com. This is not the maximum amount you can always increase or decrease the amount when you see fir however this is a great place to start.
Contemplate life insurance for your child
It may seem like life insurance is just for adults however its also great for children. Up to the age of 18, the whole children’s policy offers a fixed premium. After the age of 18 your premium may double with no premium increase. If you invest in life insurance for your child from a young age you’ll ensure that your child is able to buy life insurance as an adult. This will be regardless of their occupation or health.
The children’s whole life policy is a way of building up cash value over time which your child can use for their future. When your child turns 21 they will become the owner of the account and will have the option to cash put the policy or keep it. They will also have the option to buy additional policies if needed.
Save for college
Now that the cost of college keeps increasing year by year its key to start saving early. There are many different save-for-college accounts that offer tax advantages, investment opportunities, or guaranteed-cost tuition however it depends on the kind of account you choose. According to retireby40 a lots of Moms have started saving for college as early as pregnancy and there are many ways to do so.
Create a Written will
Now that you have children it’s important to have a will that appoints the beneficiaries of your assets if anything were to happen to you. If a written will is not in place and something were to happen to you your belongings would be divided up in court. Most of your assets may even go to the state rather than your loved ones.
When creating a will many of us think of money as the main asset however if your a parent with not much money will still need a will. Assets are everything you own from your house, jewellery, pets and house furnishing. A will gives you complete control over these assets and how they are distributed. If you have minimal assets you can search for forms online to create a will however if you have substantial asset you may want to spend some time with an estate-planning attorney.
Buy life insurance for yourself
It’s important for parents to have life insurance if possible. You should think the following: “who will look after my family when I’m gone?”. If something were to happen to your life insurance provides financial support to meet the needs of your whole family. Full life insurance cover provides security for the whole of your life, they also allow you to borrow a cash value if the need arises. You can also get term insurance which provides you with coverage for a certain amount of time usually between 10 and 20 years.
When selecting life insurance it’s important to select a policy that provides 8-10 times the amount of your salary. If you decide to choose long-term insurance make sure it’s in effect until your child is at least 18. You can also take a longer-term policy if you’d like it to be in effect through your child’s college years.
Teach your kids the value of money
It’s important you lay the foundation of a successful financial life for your child by being open about money. Teaching your kids from an early age that you have to work hard for money is a good way to start.
There are many ways you can introduce money into your child’s life. You can count change together or even given them an allowance for doing household chores you can also offer them bonuses for good grades at school. Encourage your child to save their allowances to buy items they want such as toys with their own money. They can also make and sell things in the neighborhood to make extra dollars. Tell your kids to identify chores that need doing around the house and negotiate the amount of money for each job. By doing this process you’ll be helping your child learn a number of new skills such as creative thinking, entrepreneurial skills, and negotiating ability, and to understand the importance of knowing how to make money.
Inspire your relatives to help
The best way to involve your child’s extended family to help with their future is by giving money as gifts. A good example would be to encourage grandparents to purchase a savings account or insurance policy in the child’s name. Celebrations such as birthdays and other events that include gifts are another great way to generate funds. encourage the guests to make financial contributions rather than toys or clothing.
Save for yourself first
It’s important you have an emergency fund that can be used for your retirement before considering a savings account or college fund for your child. As a parent, it’s important you have your needs in mind first. There will be a point in time where you’ll need money and you don’t want to be a financial burden on someone else. For your child scholarships, loans and grants are available if needed.
Eliminate any debt
Becoming a parent is expensive, according to the United States Department of Agriculture from birth to the age of 18 it can cost more than $245,000. This is the main reason why you should try and eliminate your debt before having kids. It’s a good idea to start parenthood on a clean slate as bringing up a child can incur a number of additional costs. Having kids may bring on the need for a bigger car or even s bigger house which is big expenses. For many purchases like this, you may need to take out a loan, lenders will need you to have a good credit score in order to lend to you.
Continue your health insurance
When giving birth in a hospital the cost can vary depending on the hospital, where you deliver and if there are any complications involved, this could cost thousands of dollars. It’s important to check how much of the cost your health insurance will cover especially if this is not your first child. You’ll also need to consider your plans after birth if you’re returning to work you may need to cover your child under your partner’s insurance or even look into the cost of affordable care insurance as an option.
Prepare for Your Baby’s Financial Future- Conclusion
As you can see there are many financial aspects of bringing up a child. There are many ways in which you can help prepare for your baby’s financial future as well as yours. The main thing to remember is to start early even before you give birth if possible as it can cost a lot to bring up your child snd save enough money to help them in the future.