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As a parent, you’ll likely spend at least 18 years raising and supporting your kids—or maybe longer if you’re one of nearly 75 percent of parents who support their adult children. However, creating a solid financial plan for your family, teaching your kids how to manage money while they’re young, and leading by example will benefit them now and well into the future—especially once they leave home and begin to build their own lives.
To explore some of the things you can do to build a solid financial plan that will benefit your family today and in the future, read on!
In This Post:
Assess Your Financial Goals
According to the American Psychological Association, working as a family to build a secure financial plan for the coming years is more important now than ever before—especially as the future of Social Security retirement benefits remains uncertain and employer pension plans become a thing of the past. By talking to our children about money and working as a family to create a budget, we can help our kids to develop healthy spending habits that will stay with them as they head off to college, buy their first vehicle, save for a down payment on a home, and raise a family of their own.
Moreover, assessing your family’s short- and- long-term financial goals and creating a spending plan that helps you to achieve these goals will benefit you and your children now and later in life. Several of these goals may include:
- Building an emergency savings fund.
- Saving for a family vacation.
- Buying a new home.
- Opening a college savings fund for your children.
- Saving for your retirement.
Once you’ve assessed your goals, work as a family to create a realistic spending plan that you can all agree on. Make a list of your family’s monthly income and expenses, and think about the things you can do to reduce your spending each month.
Invest Your Money in the Right Places
Depending on what your family’s short- and- long-term savings goals may be, it could be time to create an investment plan that helps you to save for your retirement, build an emergency savings fund, and start saving for your children’s future education expenses. If you’re new to investing your money, however, a financial planner can help you to get started.
Plan Your Estate
In addition to investing your money, evaluating your family’s financial goals, and creating a spending plan that helps you to reach these goals, it’s important to get your estate in order—as this will provide your children with financial security in the event that you can no longer care for them. As part of your estate plan, you’ll need to decide where your money and belongings should go in the event of your death or incapacitation—and who will be responsible for the care of your children. To care for your children, for instance, you may use your estate plan to nominate a close friend or relative as a legal guardian.
As part of your estate plan, it’s also important to purchase a life insurance policy if you haven’t already done so. With a term life insurance policy, for example, your surviving dependents would receive a payout in the event of your death—helping them to cover the cost of your funeral, unpaid medical bills, outstanding debts, and other things like college tuition or loss of income. Since this type of policy covers your family for a designated period of time rather than permanently, it’s also a budget-friendly alternative to purchasing a whole or universal life insurance policy.
Plan Today for a Secure Financial Future
Creating a great financial plan for your family will benefit your children today and well into the future—even when you’re no longer around to care for them. However, it’s important to include your kids in as much of the planning as possible—as this will teach them the skills they need to build a strong financial future for themselves as they grow older, become more independent, and build a life of their own.
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