Everyone says that having children is expensive. But what most parents don’t understand is that the bills often balloon up to a point where some have to work a second job to support their child through university. Their savings get depleted, and they try their very best to avoid taking out loans. And that’s just for school.
Health, Education, Food, Clothes, and everything else they need has to come from you and no one else. It will definitely get overwhelming over time, so it’s crucial that these expenses are planned early on. Here are some tips for a solid financial plan to take this challenge head-on and prepare a better future for you and your child:
If your child happens to catch more than the passing cold or flu, medical expenses can be difficult to cover. You could swipe your credit card to get rid of it, but it’s a loan that you’ll have to slave over until you can fully repay the bank. Instead of getting into debt, consider the following:
It is up to you to decide whether to get them insured. Some might see insurance as an unnecessary expense and not logical to insure young, healthy children. But life is tough to predict. You never know how sick your child can get and how big of a balloon that medical bill will become.
You could consider getting insurance for them and research what reasonable plans for you and your family are. The important thing is that you put money towards their health whenever the time to finance it arrives.
2. Emergency Fund
An emergency fund is a must-have for any individual. If you do not have one yet, you need to start saving one for yourself right now. Likewise, preparing an emergency fund for your child will make it easier for you to cover up the expenses that insurance cannot. It can also be used for anything unexpected or any emergency that requires a lot of financing.
Paying for your child’s school fees does not count as an excuse to use an emergency fund because you can plan for it ahead of time. However, as much as possible, it is crucial to avoid going into debt for your child’s education. If you do not put anything aside for university, they will feel the pressure to find funding for themselves and might even incur a great deal of debt as they work their way toward graduation.
Starting adulthood with hefty student debt to pay off is bound to create guilt for yourself and a rough start in life for your child. This is how you can provide you and your child some peace when the time comes:
1. Education Fund
Set aside a reasonable amount for your child’s education as soon as you find out you’re about to have one. But do not keep it all in cash because even if no one steals it, inflation can get to your finances. Instead, decide on a good investment vehicle that can help the education fund adjust for education over time, like a time deposit or bond fund.
Investing in a property for sale is a surefire way that you can secure assets in the long run for your child. It is not a handout for them but a means of financial security for you. Whatever happens, owning land will appreciate over time.
For instance, when your child goes to university or a far-off school, they will need housing. Putting money towards a home that your child can come home to will reduce the overall costs of renting it out for as long as they need to throughout their education. At the same time, when your child is done learning, you can lease out the home, sell it, or stay in it. Parents who don’t make the investment early on have to rent a space for their child, which can lead to more debt in the long run if they’re not prepared.
Again, even if you set aside money for your child’s growth, do not keep it in cash. Invest it. The price of food, drinks, and other needs for your child until their independence is bound to increase. It would be best if you protect yourself and your child from a growing wealth gap.
It is never too early to plan the financing for your child. You have brought them into the world, and it is only fair that they get the quality of life they deserve.