Finances: Planning for Children

It is a joy for every parent to bring a new person into this world but more often than not most parents stumble through a child’s future by not planning adequately in time and reacting to the child’s growth. Ironically, every parent would like their children to have everything at their disposal for a better life. This calls for a proper plan to be in place before a particular need is staring them in the face. Such needs include education at all levels right from nursery school which these days are just as expensive as primary and secondary school education. Parents need to begin saving early by putting away relatively small amounts of money every month, even as little as five thousand every month as soon as a child is born. By the time they are five years, you could have plus interest to give a good educative background for your child. Many banks now offer saving plans for children to prepare them for a good future. Parents should take up such opportunities when they would nevertheless not affect their total incomes yet provide a safety cushion for a child’s future. Parents should also consider taking life insurance to secure the lifestyle and indeed the financial well being of the family in the unfortunate event of the breadwinner not being around. Even with all the negative connotations of such an idea in our traditional African culture, the truth of the matter is that if you can afford life insurance, it is one of the best things you can do for your children because you cannot be sure that what they inherit from you will be as well managed when you are absent. Parents can also make investments on behalf of the children but while doing so have to understand the legal implications of such investments. For example investing on behalf of their children in their names will bring the issue of children not being legally able to own property because of their age for example. If you invest in your name, then a will needs to be in place to make sure that in case you are not there, the child can still claim their property or a manager can hold the property for the child before they reach the legal age to operate bank accounts for example or own businesses. More importantly, parents should inculcate into their children the values of responsibility, reasonable frugality and good spending habits. These will provide the foundations of good financial education for the child. Ends

Lifestyle

Finances: Planning for Children