This is sponsored advertising content by State Farm®
As a parent, you witness your kids go through different stages in their lives as they become older, and it seems like they grow from being babies to young adults before you know it.
Through these stages, it is important to have a plan for your family in order to prepare for what the future might hold, including steps to becoming financially responsible.
One important part of being a mom is to nurture your kids and make sure they have essentials. While you need to provide for your kids now, it’s also important to help ensure they’re well taken care of in the future. There’s no better way to prepare than starting today.
Below are three ways on how to start arranging a healthier future for your family:
1. Save and Protect
Saving is one of the most important steps for your family to become financially secure, including having an emergency fund or a long-term savings plan. The emergency fund is solely for the purpose for unexpected events such as car repairs or unplanned medical bills. It’s a good idea to deposit money in this type of account on a regular basis until you meet your savings goal. A long-term savings plan is meant for use later in life. It can be used to have money readily available for things like the purchase of your kid’s first car or you can plan to save it for retirement.
Another important aspect of financial well-being is to help make sure your family is protected in the event of a premature death, or if you or your partner can’t work due to illness or injury. Insurance protects you and your family from the unexpected and it’s important to ensure your life insurance and disability insurance are up-to-date as you enter various life stages and your needs change (i.e. buying a home, having children, starting a new job, etc.)
2. Teach your kids about finances
It’s never too early for kids to learn about saving money and how to become financially responsible. They often learn best by doing and that can start at home with practicing financially smart habits. You can show them how to earn money, help them set up a savings account and be proactive with their saving. Kids can earn money by doing chores around the house, as an incentive for good grades or with a simple weekly allowance. You can set up a savings account with your children to deposit their earned money and then watch it grow together.
As a parent, being involved in your children’s finances and answering their money questions early helps set them up for success later in life. It’s never too early for financial education, and as a parent, it’s also essential to practice what you preach. You are your kid’s first role model and everything you do, they’ll follow and learn from you.
3. Learn about investment options
One important step to make for your children’s future is to save money for their education. Some parents start doing their research very early on, even before their kids are born and there are various options to consider. One option is the Coverdell Education Savings Account (ESA). This is a trust or custodial account that can be used for your child's elementary and secondary education, as well as post-secondary education with a $2,000 annual contribution limit. Another option to consider is a 529 college savings plan for qualified higher education expenses, if you are looking invest more money in their education. A parent can contribute up to $70,000 spread evenly over the course of five years to this plan, avoiding federal gift tax. These are both great options to consider in the long run to help your kids pay for college without worrying about loans.
It's good idea to become a financially stable for the sake of your family. Start your family off on the right track in order to get to the point of obtaining generational wealth to pass down. It’s important to realize that it starts with you as parent and the lessons you teach and model for your kids. Consider getting your savings plan in order before even starting a family. The sooner the better.
Neither State Farm nor its agents provide tax or legal advice.
This is sponsored advertising content by State Farm.