10 Practical Ways To Plan For Your Child’s Financial Future

This is a collaborative post.

As a loving mom, there’s no doubt that you have already worried about your little ones’ financial future. With the ever-struggling economy, recession predictions, and the continually rising cost of living, planning for your child’s future as soon as possible is best. However, because you are probably already overwhelmed with everyday chores, financial obligations, and caring for the needs of your child, we have compiled this list of practical ways to start safeguarding your baby’s future. 

Consider An Registered Education Savings Plan

If you reside in Canada, you should take advantage of a resp account (registered education savings plan) as the government will match as much as 20% of your contributions to the account per year. While this is limited to a ‘per child’ notion, the Canada Education Savings Grant program will also contribute no more than $2,500 per year. So if you are searching for the best education investment account for your child, you should research important questions about this type of account, such as ‘how does a resp work,’ and ‘what documents are required to open a resp account.’ 

Adopt The Habit Of Saving

No one is born with a tendency to hoard wealth, and while most of us might never achieve billionaire status, saving is undeniably crucial for parents. There’s genuinely no way of predicting the future, and your little one will likely need money later on for tertiary education, a vehicle, and other costly essentials. While you should open an individual investment account that intends to cover higher education costs, ideally, you should also save separately for other future expenses. When it comes to adopting the habit of saving, it is essential to create realistic savings goals and save where possible, even if you can only put away a small amount for some months. 

Protect Your Child With Insurance Policies

Life insurance is not just for adults, as you can purchase life insurance for your child. Because life insurance policies gather density over time, your child can take over the approach later on, regardless of their health or occupation, and enjoy the peace of mind that life cover has to offer. 

Protect Your Contributions With Life Insurance

While pondering your death and how it would emotionally impact your child is a daunting thought, your financial contributions to raising your child are vital to their growth and eventual success. Instead of hoping you won’t have to leave your child behind in an unfortunate event, you should purchase life insurance to protect your child should you pass on too soon. Life insurance policies will require your will, so be sure to consider essential details, such as a trusted beneficiary if you pass on before your child is 18 years old. 

Create A Detailed Will 

As a parent, your will should include details of a trusted beneficiary of all your assets if something happens to you. Suppose you leave this detail out; your assets can then be divided by a court, in which case, your child’s best interests might not take priority. Your will should contain a beneficiary of your assets and a legal guardian for your child. It is also wise to include a secondary guardian. Even if you don’t feel a will is necessary, assets are not exclusive to the world’s wealthiest, as every parent who owns a bank account should draft a will with a professional lawyer’s help. Your house, car, jewelry, furniture, clothing, and even your crockery are items of value that should be an inheritance for your child.

Encourage Your Family To Consider Contributions

Involving your child’s extended family in saving towards their financial future is a great idea. While you don’t have to ask for money bluntly, you can ask them to instead make small contributions in place of gifts for both you and your child. While your child is still small, they will likely forget growing up in an abundance of toys and other types of gifts. So encouraging your family to contribute towards savings accounts will be far more practical and sensible when safeguarding your child’s financial future.

Teach Your Child The Value Of Money 

As your child grows, you should educate them on the value of money, earning wealth, accumulating wealth, investing, and other financial details that most of us only learned much later in life. Instead of leaving these lessons to your child’s school, teaching your child the value of money will be exceptionally rewarding for them later on in life. It can be a massive challenge for younger professionals to stumble and stand while learning how to save and budget, which is why you should invest in your child’s future by teaching them essential money lessons. 

Shrink Your Debts

When saving for your child’s future, it is vital to shrink your debts as much as possible. This will not only allow you to save more, but it will also help you educate your child about the dangers of debt and how to live without relying on lenders. You can shrink your debts effectively with the snowball or avalanche method. While the snowball method suggests paying off smaller debts first, the avalanche method suggests the exact opposite. However, both are expert recommendations to achieve a debt-free status and reduce the amount of interest you pay back ultimately.

Understand Your Health Insurance And Maintain The Deductible

Suppose you, your partner, or your child should fall ill or become injured. The heft medical bills could set you back financially for quite some time. This would affect your savings and your quality of life. Instead of assuming the details of your health insurance policy, it is crucial to understand how the insurance cover works, which healthcare providers’ umbrella network is covered, and maintain the policy deductible. If you default on a month’s deductible, your insurance policy may be rendered inactive or null until the missed amount has been paid. 

Open An Emergency Account

It can be heartbreaking to find yourself accessing your child’s savings account when confronted with financial troubles. However, you can effectively avoid this unfortunate instance by opening an emergency account. Spreading your savings over a few accounts with different intentions will help you gain complete control of your finances and overcome unpredictable emergencies without relying on debt.