It’s no secret that having kids is expensive. But when you start raising a family, there’s more to consider besides the rising cost of formula and paying for a daycare center when they’re older. Your financial responsibilities toward your children can extend into their teenage years and well into adulthood. Because as much as we like to think that we’ll always be around for our kids, the truth is, nobody knows what the future holds.
Here are some tips on making your children’s financial future as secure as possible:
1. Invest in a Life Insurance Plan for Yourself
If you don’t have life insurance, your children might find themselves saddled with thousands of dollars in medical debt, an unpaid mortgage, funeral costs, and more. To prevent this kind of stress, consider investing in life insurance. You can choose a limited-term policy that pays out within a certain number of years or a whole term policy, which gives your family a cash payout no matter when you die. Some employers also offer life insurance in the case of a job-related death.
Finding out is life insurance taxable, or not is a common concern for most people. Fortunately, most life insurance payouts aren’t considered income and therefore not subject to being taxed.
2. Start Saving Up for College
It’s never too early to start saving up for college. You can start saving up while your child’s still in the womb. Universities can cost tens of thousands per semester, and the price always seems to be rising. If your child is an infant today, who knows how much college will cost in eighteen years? If you don’t want your child to be burdened with thousands of dollars in student debt, saving up for college can ease some of the burdens and help them get a head start in life.
You can save up for college through a traditional savings account, or–more commonly–a 529 savings plan. This plan allows you to contribute savings over the years that can only be used for education-related expenses.
3. Consider Large “Milestone” Purchases
Long before your child ever goes to college, there’s going to be some significant milestones along the way. When they get old enough to have a phone, you’ll probably have to shell out the money for a device and a phone plan. As their sixteenth birthday approaches, it’ll be time to start thinking about their first vehicle. Of course, your child can cover some of the financing themselves, but a 15-year-old working part-time probably won’t be able to afford their vehicle. Think about the milestone purchases you’ll have to make and plan accordingly.
4. Figure Out Who’s Going to Watch the Kids
If you or your spouse is a stay-at-home parent, you’ll be able to save a lot of money in the long run. But if you both work full-time, you’ll have to decide how you’re going to meet your financial needs. Are you going to pay for a babysitter or a daycare center? Or will one of you quit your job and see if you can survive off one paycheck? This is a decision you’ll have to make for several years, and it might take some time to balance your financial needs with your desire to stay home with your children.
5. Learn How to Live Cheaply
When you were childless, all you had to worry about was paying the bills. When you have kids, you’re going to be juggling their fixed expenses on top of everything else. Learn how to save money, cut corners, search for discounts, and be thrifty so you can keep the kids healthy and happy while also paying the bills on time.