When it comes to our children, we parents just want what is best for them. Whether it’s a good education or having money set aside for an inheritance, you want your children to have everything they need.
Start financial planning early so that you can give your children the life you want them to have. Also, make sure to include them in on your efforts. Not only can it help keep you on track, but it can also teach them valuable lessons about money to help them later in life.
Here are a few tips to get you started on giving your children a financially stable life now and in the future.
Start a Family Budget
First, develop a stable budget. Whether it’s done on paper or through an app, prepare a budget that’s realistic and easily accessible for your entire family.
Start with your income. If you have multiple sources of income, bring them all to the table. This will show how much money you have to work with each month. You can then divide your income into your expense categories. First are the fixed priority expenses, like your mortgage and car loan. These are expenses that tend to be the same each month.
Once those are established, move on to budget items that aren’t a necessity but are nice to have (entertainment, for example). Keep in mind that you should be using the money left over from your priority expenses to purchase these items, not the other way around.
Don’t forget to designate a portion of your budget for your children’s savings. This could be used as a college fund, or even to take them on a family vacation or to a special event. No matter what it’s for, if you want to provide a stable financial future for your children, you should plan to have money set aside.
Start Teaching Them About Finances
Include your children in your financial planning. There will come a point in time when they are on their own and will need to know how finances work. Set them up for success by teaching them how to budget, manage expenses and save money.
Try giving your kids more financial freedom as they get older. Understandably, they will make mistakes with their spending, but you can use their choices as teachable moments to build a strong foundation for money management. As long as they are protected from making truly costly mistakes, try giving them a chance to make decisions on their own to more profoundly understand the consequences. Kids learn by doing. Try allowing them to experience real-life financial responsibilities such as saving up to buy a toy or contributing to household purchases like groceries.
An added bonus is that when you include your children in family finances, you’re acting as a role model for them. You’ll be more inclined to stick with your financial plan since your children are learning by watching you.
Life Insurance for Their Future
Consider purchasing life insurance and making your children the beneficiaries. By doing this, you are helping to set them up for a financially protected future…if you were to pass away suddenly. The money can be used to pay funeral expenses and also to help them have the financial resources they need, even if you’re no longer there.
Learn From Your Mistakes
Whether you were taught about finances as a child or didn’t have a financially stable upbringing, your children can learn from your valuable experiences. Use examples from throughout your life as a way to teach and coach your children about finances in the real world.
These are some starting points for getting your children accustomed to budgeting and learning about finances. They can also help you to meet your financial goals as you set the best example you can for your kids.