The Importance Of Protecting Your Child’s Future Financially

Being a mom can be hard work, but once you seem to have the hang of it, the years can suddenly seem to fly back so quick that before you know it, you're thinking of college and how you will afford it. Considering that the average student in America graduates with $37, 172 in student loans, many parents begin setting aside money almost from the outset to ensure kids have a ‘nest’ on which to fall back on. Of course, college is just one of many considerations parents can keep in mind to protect a child’s financial future to the greatest extent possible.

Starting Your College Fund

The average amount of money saved by parents for their child’s college is approximately $18,000, according to the 2018 report, How America Saves for College. This amount has increased significantly compared to past years, but it's still significantly beneath the average yearly cost of college with tuition (around $47,000). If you're keen on starting a fund, consider opening a 529 investment fund, which has significant tax advantages, and which will earn you around a third of the savings you make if you start the fund when your child is born.

Considering Life Insurance

Most people don’t really think of life insurance until they're middle-aged, but the right time to pursue an insurance plan depends on your priorities. A life insurance plan will ensure your kids are well taken care of if anything should happen to you, and some financial advisers even recommend purchasing life insurance for your child. Advantages of the latter include providing children with a savings vehicle they can borrow against or surrender for money in the future. This money can be used for anything from a downpayment to further life insurance.

Making A Will

We feel invincible, and with luck, healthy lifestyle choices mean we will be around for our kids for many years, but it pays to play on the safe side and make a will. A 2017 survey by Caring.com found that nearly six out of ten people do not bother making one. Why should you? For one, making a will takes the hard work out of testamentary issues. Families grieving a loved one don’t need the extra burden of sorting through paperwork or having to put up with claims on an inheritance. Drafting a will enables you to be crystal clear about who gets what, and ensures that your property is divided in accordance with your state’s laws.

Setting Clear Financial Goals

In addition to starting a savings fund early, it's important to set specific financial goals that take into account your income, assets, mortgages, living expenses, etc. If you want your child to attend a specific school, attend extra-curricular activities, or enjoy tuition for certain subjects, you will need to ensure your earnings are sufficient to cover these expenses. Setting goals enables you to define what is realistic for your family, taking into account your health and well-being as well. It's important not to aim too high if this involves unrealistic expenses you cannot reasonably provide.

Securing your child’s future begins soon after they are born. Some measures require you to be proactive, including making a will and setting savings goals. Others require you to create a balance, remembering to be kind to yourself to ensure you are around for many years. Money may make the world go round, but it shouldn’t be the only focal point of your life.