As parents, financing the future of our children should be an important part of how we invest our money as the years go by. Setting your child(ren) on the right path financially has a lot to do with how we invest. As for financing their future includes everything: from nurturing them, to their living expenses; and one of the biggest cost factors of raising children is sending them to school, so the earlier we start investing, the better. Even as young adults, we are advised to start this trend before we have children if we can.
Getting into the habit of saving for a child’s education early is beneficial. Start putting something away as a young adult; because it is the compound interest effect of investing that makes a big difference.
Savings Plan for your Child
At the minimum, parents should save at least 20% towards a long term savings plan, that allows your money to generate interest; so when looking back after 10-15 years, you have a sizeable amount of money not just for the child’s education but the family expenses as well. Doing this intently will become a lifestyle and you will tend to invest in yourself before deciding to spend money on material things.
How to Invest
This is where we get into the whole concept of diversification. Parents are advised to do their research online or find a reputable investment professional that they can sit down and talk with to give the initial guidance of the best places to put their money. If you have no idea what you’re trying to achieve, it’ll be difficult to know what to invest in. ‘How to invest?’ brings with it a whole concept of diversification; as there are different interests in terms of the interest rates that a particular instrument gives you; such as investing in real estate or investments that call for returns like investing in stocks.
Investing, in particular, in your child’s education requires plenty of research. The cost of education is usually high at the secondary school and university level; at the university level, parents are open to sending their child abroad to further their education. Parents should have an idea of what they want early in the child’s life; the type of school they want their child in and calculate the years. From this, they can research the number of fees and levies and the investments they can venture into in long term to achieve this idea. Such can be put forward to an investment professional and sorted out.
Budgeting for your Child’s Education
As parents, we must be all very realistic. It is not in the best interest of your family’s future to put yourself under such pressure because you want to finance your children’s education. There’s a good school on every budget, it takes a lot of research but you can find the school that fits your budget; to the point that you’re not putting your health and your future retirement plans at risk. If you put everything on the line to send them to an expensive school, what happens when the children finish? They will have to also take care of their life as they become responsible adults. Parents need to change the idea that their children are their retirement plan, they are not; so we need to look at it that way and see what can we afford.
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Parents can find learning plans online to supplement whatever they feel the school is not providing for their child. For example, the ability to code and AI, these things are the future; you can find fantastic plans online, many times free, or a fraction of cost, where your children can start to learn how to code, whether or not the school is teaching them. Parents must be able to identify what their children need to succeed in today’s world and the future, and then work backward. Yes, education is a big cost item, but spending on it should be done judiciously
Financing our Children’s Future aside Education
One of the most important things for parents to plan aside from education is healthcare. Children need to have good health, and a good health insurance plan is necessary for this; parents need to see this as part of an investment in their future. Another important thing is their basic needs; basic needs in the family takes up to 50% of the family income, so parents need to plan for that as well.
Opening Bank Accounts for your Children
This is a good step toward financing your children’s future; as it teaches them about financial literacy very early. Opening a bank account for them lets them understand what it means to have an account. Get them interested in investing early, get them used to investment ideas such as the stock market; they are not too young. Bring up these conversations with them and find out how interested they are; let them do the research on want they want to invest in.
We are all encouraged even as young adults yet without children to plan towards financing our children’s future for their future to be the best it can be.
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