As a parent, you would want to ensure your children’s success. Don’t forget to invest to secure your children’s future – from schooling to extracurricular activities. There are several methods to prepare for future funds that can contribute to your children’s financial well-being and provide them with the necessary skills for success.
1. Model Good Financial Behavior
To place your children on the path to a more prosperous financial future, consider where they first learned about finance. You are their first financial educator, which is why it is vital to model good financial behaviour in front of your kid. Financial literacy is a critical skill that will assist children in managing their money throughout their lives.
Whether at the dinner table or when shopping, there are several opportunities to educate your children about money.
You should make it a point to teach your children the importance of saving and the importance of making well-informed financial decisions today so they may reap the rewards later. You can teach your children how to handle their money, encouraging them to follow suit by modelling this behaviour.
The Financial Consumer Agency of Canada offers a variety of information and tools to assist parents in developing their confidence while educating their children about finance.
2. Save funds for schooling expenses
Although the Canadian government pays for public education, parents must save for their children’s higher education. Canada’s universities are world-class and expensive too. Thus, you need to start saving early.
According to Canada’s finest institutions, undergraduate degrees cost CA$6,463 and CA$7,056 a year. Graduate degrees vary from $6,463 to $7,056 annually.
Apart from tuition costs, you must consider extra expenses such as travel and student accommodation.
You can save tax-free for your children’s education with an RESP. If you have multiple children, apply for a family RESP. The RESP plan is beneficial since the Canadian government will match 20% of your annual contributions.
3. Buy life insurance
Many families do not have life insurance. However, it is advisable to buy life insurance if you have children and reside in Canada, especially considering the challenging and unusual times we are now experiencing with the Covid-19 pandemic.
While getting life insurance may add to your monthly budget, it is vital to ensure your family’s safety, stability, and a bright future. If anything unforeseen occurs to you or your spouse/common-law partner, life insurance may help you protect the people you care about the most.
You may choose a monthly premium that fits your budget and helps you prepare for the future by paying it over 10, 20, or 30 years.
You should also consider buying insurance for children to keep your family immune from any unwanted financial challenges due to your child suffering from health issues.
4. Open a savings account
Saving begins with the accumulation of funds, whether in a piggy bank or via the opening of the bank account.
If your children are under the age of 18, they may be unable to open their own savings account at a bank. However, as a parent, you can start one in their name, and they can take ownership once they reach the legal age of majority.
Educate your child on the basics of saving and encourage them to save early. If kids assist around the home, they may learn about responsibility and save their earned allowance. If kids get money from family and friends for special occasions such as birthdays, they may also deposit it into their savings account.
5. Control your finances by creating a spending plan
Creating a spending plan might help you control costs and debt. It may assist you in determining whether to spend money on things, including restaurant meals, vacations, and high-end electronics. Spending less on these products enables you to pay for more urgent needs, such as baby furniture or child car seats.
6. Begin your research into child care
Parents who reside in Quebec may qualify for subsidies that limit daycare rates to $7.30 per day. In other parts of Canada, daycare rates may vary from $700 to more than $2,000 per month, with baby care being the most expensive. The sooner you begin your search, the sooner your name will show on waiting lists for your chosen daycares.
7. Invest in real estate
If you can afford it, buying property in your child’s name is a worthwhile savings strategy that fulfills various financial requirements, including medical crises. Real estate is a lucrative industry if traded correctly. You would require adequate market research before making a purchase.
Investing in real estate can also help you build a future asset for your child and enable them to settle easily.
Real estate investment is only advantageous; it will serve a more significant function even after the child sells it. Your child’s education, start-ups, and other activities will no longer be a concern to you.
8. Learn about your insurance options
Having children is a great opportunity to think about family security. If you want security that suits your family’s requirements but has limited financial resources, term life insurance may be the best option. It is also an excellent option for expanding families.
Disability and critical illness insurance may also be essential components of a financial plan if you want to protect your family in the case of an accident or severe illness. On the other hand, individual health insurance may assist families with dental treatment and extended health benefits.
9. Ensure you have a will and plans in place
A well-prepared will may help ensure your children’s financial security. While do-it-yourself will kits are a cost-effective option, the additional money spent on an estate lawyer may mitigate the danger of misunderstanding your intentions.
10. Teach your kids good money habits
Good financial habits are vital, so your kids can manage their own money when they reach a particular age. Setting monthly pocket money, budgeting, and taxation are essential lessons they must learn early, and these practices will help them manage their finances when they start earning.
Saving is a sensible option for everyone. You can only accumulate a large amount of money through regular savings. While saving may not provide your kids with a large sum of money, it may help them fulfill their dreams, focus on their education, and live a comfortable life. You must choose a lucrative savings strategy that enables you to save while also ensuring your savings are an investment. In this manner, the money’s value grows daily, monthly, or annually.