7 Sure Ways to Safeguard Your Children’s Financial Future

The joy of holding your child in your arms for the first time is unmatched. It marks the beginning of a series of heartwarming milestones that leave your heart full of love. You watch them throw you their first smile, take their first step, say their first word, and so forth. 

They change your world in good ways, uncomfortable ways and everything in between. But they are worth it. 

Having a baby is a life-changer. It gives you a whole other perspective on why you wake up every day. – Taylor Hanson

It is common knowledge that once you have kids, your priorities shift dramatically. We all strive to give our little ones the best that we can. 

Now, instead of getting joy from throwing around money on road trips and friends nights out, our minds are more focused on what ‘my baby’ needs. We derive pleasure and a sense of fulfilment from pleasing ‘this other little person’. 

But it is worth it. The reward of having children by far exceeds the worth of every penny spent on them. 

But are we doing it the right way to ensure that we give them a good head start in life? This article provides you with tips on how to make sure your children have a secure financial future. 

Introduce Finance Literacy From an Early Age

In addition to good discipline in your children from an early age, teach them about money. In a capitalist society like ours, how much you know about money determines whether you will be making a successful adult or not. 

Many parents get everything else right but forget to instill strong financial discipline on our kids from a young age. So when they are grown and in a situation where sound financial knowledge is required, they start running on fumes. 

Without the correct financial knowledge, even the most disciplined children will have trouble dealing with the complexities and realities of handling finances in adulthood. This is why there are currently many cases in Kenya of children who have mismanaged the inheritance they received from their parents. 

So don’t leave it to the teachers to teach your kid financial literacy. Start educating them early. Start now.  

Invest in a Good Education Foundation

Long gone are the days when the most important thing an African parent could leave their child was acres of land to inherit. As a parent, you are lucky to have a place to build a family home, leave alone acres to leave for your children. 

So the best thing you can leave your kids now is to give them a good educational foundation. As a parent who has their kids' well-being as a priority, it is not enough to just send your child to school because they are now of age. A lot more goes into it than that. 

For example, invest in a good school that knows how to nurture your child’s education based on strong personal points. 

A good education brings many good things to your child’s future; 

• Improves career prospects
• Improves the economy in general
• Makes them ethical members of the society
• Makes them happier
• Brings progress

Open a Custodial Savings Account

One great way to teach your child about savings and investments is through a custodial savings account. Many local banks offer this service. For example, KCB Bank has a cub account that works great for this kind of service. 

So how does it work? You simply open the account and put in a little money for your child every so often. You can also teach your child to save in a ‘savings box’ at home and then take them to deposit into their account every once a month or so.

This will not only teach the child financial discipline, but there will be money readily available for when the child needs an allowance or needs to buy their personal items. Also, talk to the child about the interest the account earns and how it will generate more interest as the amount increases.

Get an Education Insurance Policy

There is no better way to secure your child’s education while relieving yourself of the future financial burden than to buy an education insurance policy. An education policy gives you a chance to save for the education future of your child. 

But unlike other saving options, it offers you a life insurance benefit. This means that in the event that you (or the policyholder) dies, the child will still have access to the full benefits of the fund to help finance their education. 

The best time to buy an education cover is as soon as your child is born. This gives you sufficient time to save, and by the time your child reaches college level, the stress and financial burden are completely lifted off your shoulders. But it is never too late to start. 

Plan Your Retirement

In our previous article, we discussed at length how ‘parental dependency’ and black tax affect the young generation financially. It is good that they give you a helping hand, but it is wrong to make your children feel like they owe you. 

Hence, in the spirit of breaking this tradition, strive to prepare well for your old age. For example, your health may deteriorate as you age, ensuring you have adequate measures to cover for this eventuality would be massively beneficial to both you and your children. Buy a medical cover or have smart savings to take care of this.

If you rely on your children to take care of your medical bills, you will be putting a strain on their financial well-being.

To ensure that you do not depend on the kids in your old age, start investing and saving for your retirement as early as possible. The earlier you start, the better. 

Get Life Insurance

No one lives forever. Many think that getting life insurance is inviting death for themselves. But this is not the case. 

On the contrary, life insurance is a great way to ensure that your little ones are provided for even in the event of your death.

It is especially advisable to take life insurance for yourself if you are the main breadwinner in the family. However, in a two-parent family, you can both take the insurance for extra security for the family. A good life insurance cover cushions the family for both short-term and long-term expenses such as the kid’s education up to higher levels. 

Draft an Update Will

It doesn’t matter how much your net worth is. Ensuring that your will is up to date is a crucial part of safeguarding your child’s future. Humans are greedy. And so are relatives. If you do not want your children fighting with your relatives over your property in case you are dead or incapacitated, create and constantly update your will.

Also, remember to name a trustworthy guardian in the will if the children are minors and can not administer the estate independently. 

You also need to appoint a child’s caretaker - someone who will take the kids to their home and take care of them in case of your absence. It can be one person or several but ensure that the person (or people) clearly understand your wishes. 

Conclusion

It is every parent's desire to secure their child’s future. But to successfully do that, only wishing is not enough, you need to have a proper strategy to get you there.

The tips above are a great way to get started. It is doable. So get started, and your child and their future will thank you for it.