One of the greatest gifts you can give your children is financial stability. Parents often do not teach their children about money because they don’t have a good understanding of it themselves. People also tend to drag issues from their families of origin into how they think about and manage money. If one of your parents spent so frivolously that your family struggled to make ends meet, you may be an overzealous saver. The tips below can help you and your children prepare for a lifetime of financial stability.
Talk About Money
In many families, discussing money is taboo and parents find ways to save money for their kids but never share the process. Talking openly about the cost of things and how money works helps destigmatize and allows children to see it as just another aspect of life. This also gives you the opportunity to offer age-appropriate lessons. When they are young, you can talk about how much things cost at the grocery store and show them price comparisons. You might give them the opportunity to choose between two or three things that they want at the same price so they can see how value for money may differ. As they get older, you can teach them about credit and savings and help them open a bank account.
Plan for Retirement
Retirement planning benefits both you and your children. It helps you because it ensures that you can enjoy the retirement that you want, but it also means that your children won’t need to supplement your finances at the very time that they probably have children and financial obligations of their own, such as buying a home or paying for a wedding. By making sure that you take care of yourself, you take care of them as well. If your employer does not offer a retirement plan, you should start one on your own. Even if you can only put a little away from each paycheck, the interest it earns means it will compound as you get older.
Get Life Insurance
Life insurance serves multiple purposes. It is critical for ensuring that your children are taken care of financially if anything happens to you, but you may not be aware it can also help you after your children are adults and no longer need this coverage. If you are looking at your retirement savings and you aren’t happy with the assets you have managed to save so far, you could consider a life settlement. You can review what your options are and how this can help with retirement planning when you need it most down the road.
Estate Planning
Estate planning is important if you are a parent because you want your assets to pass to your children as seamlessly as possible, but there are other reasons it can be important as well. Instead of using a will to pass your assets, you may want to consider a trust, particularly if your children are young adults. You can use this to specify that they will get distributions at certain ages or other milestones. This can help increase the likelihood that they will be mature enough to manage the money wisely. Having enough to make a down payment on a home can make a huge difference in their long-term financial stability.
