Most people don’t think about leaving money to their kids until they have kids to leave money to. Prior to reproducing, people tend to be a lot more easy-going with their spending and budgeting. This can create a situation where, prior to children, you don’t have a very firm financial situation, at least enough to create greater wealth for your children.
If you don’t have children yet, but plan to, start improving your financial situation now. Once you have children, you won’t have the same struggles as someone who has no good financial habits in place before the kids are born. If you already have children but you don’t have those skills just yet, don’t panic. It’s easy to learn new skills and apply them if you focus on one thing at a time.
One of the best ways to prepare a better financial life for your children than you enjoyed yourself is to plan in advance for emergencies. There are many ways to do this. One of the best is to create an emergency fund, one which will cover your family’s expenses for 3-6 months if not more. In order to do this, you’ll have to pay off debt first, so emergency funds pay off in more ways than one. In addition to creating financial benefits, you’ll also enjoy better peace of mind this way.
Another way to prepare for the worst is with life insurance. If you are a parent, you can know for sure that your family will be worse off financially without you. Even if you are a parent who stays home with children, without bringing in much or any income, your service is still very valuable. Childcare is expensive, often the biggest expense a family has in a given year. If you are not there to provide it, this bill will go out the roof. If you are a family wage earner then it’s obvious that your income is necessary for your family’s ongoing lifestyle. Life insurance quotes are easily available and may be more affordable than you think.
Families can also build wealth through important life goals like home ownership. Home equity is a powerful tool for wealth storage. It’s not like cash, because you can’t spend it very easily. It’s more like a savings account that you pay into each month, but which is only able to withdraw upon when you sell the house or borrow against said equity. Home ownership is traditionally the #1 way families start to build real wealth.
Investments for retirement and beyond are another method. A strong portfolio is a great tool for every family to build wealth in the medium to long term. Whether you or your children enjoy the proceeds, it’s something to get serious about as soon as possible.
There are many ways to build a better financial life for your children. All methods require sacrifice and planning, but if you get started, you’ll likely find that it is one of the most rewarding processes you’ve committed to in your entire life.