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Securing a Financial Future for Your Children

01.24.22

Image Courtesy of Pixabay

Securing a financial future for your children is among the most significant responsibilities as a parent. Unfortunately, around 50% of people don’t consider savings, even for emergency funds. There are many reasons for this, and everyone’s situation is different. But you can ensure your kids have some money available when they get a little older using various money-saving methods.

Investments and Trusts

Anyone can begin an investment portfolio, and you can invest in pretty much anything. However, your available funds will limit how much. Today, one of the most popular investments is a cryptocurrency like Bitcoin and another blockchain tech such as ChainLINK. You can use Swyftx to buy LINK and other cryptocurrencies. Trusts are also an excellent way of securing future funds. Real estate investment trusts (REITs) are the easiest. You buy a portion of a property with a REIT rather than the whole building. Be aware your money is always at risk when investing.

Life Insurance Policies

None of us like to think of our death, but it happens to everyone. You can leave a substantial amount to your children when you pass away with a life insurance policy. Life insurance companies typically recommend six to ten times an employee’s annual salary as a reasonable amount. Alternatively, you can multiply your yearly salary by the number of years left until you retire to calculate how much life insurance is needed. Payment might be withheld in specific suspicious circumstances, but around 98% of insurers pay out what they should.

Savings and Equity

A lifetime of savings can go a long way to helping your kids. College funds, a downpayment for a new home, or even a much-needed car will help them out. And saving money isn’t as challenging as you may think. Considering the average US salary of $56,000 annually, 20% per month over 18 years equals $198,720. A rather sizable sum that will pay for almost any college course many times over. Additionally, you could liquidate any assets for their accrued equity over 18 years. Your investments can add a substantial amount to savings for your kids. 

Estate Planning

Your assets might be large or small. However, no matter the size, you may want to decide what to do with your things after you are gone. A family member could do this for you should you have little to leave behind. But it is recommended you consult with a qualified estate planner or attorney. Using this method, any complex legal work is taken care of, so your will is executed precisely as you wish. An estate planner will also apply their skills to minimize inheritance tax. Hence, your money and left behind estate go a little further for your family. 

Teaching About Finances

Of course, you should pass on your financial knowledge to your children. Since accounting isn’t taught in school, your kids must understand and respect the value of money. For instance, you don’t want to hand over your savings only for them to blow it. Instead, you can control the amounts they receive using a trust. Still, they also need to understand how to use money responsibly. For example, teaching your children to prioritize buying groceries over frivolous items will instill some responsibility. Also, it is helpful to teach them about savings, investments, and trusts so they can do the same for their children when the time comes, and so on.

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