The average annual cost of raising a child in America is $13,000 dollars, based on information from the Washington Post. Children need so many things, including clothes, food and school supplies. Parents must handle the day-to-day cost of raising kids and also need to secure their children’s financial futures. The smartest way to safeguard a child’s financial future is through careful financial planning which includes life insurance, bonds, and home equity. This guide offers practical facts that will make it easier for parents to meet their child-related financial goals.
Life Insurance is a Must
It’s quite common for parents to postpone buying life insurance as some find the concept of acknowledging their mortality uncomfortable. Others are very busy and just haven’t gotten around to purchasing life insurance. Yet NGLIC.com asserts that having valid policies in place is the key to ensuring that children will have financial security when their parents are no longer there.
Bonds Offer Established Returns
When parents purchase bonds, which are fixed income investments, they’ll typically receive established returns on fixed schedules. With a bond, a parent will be lending money to a corporation, government or other types of entities. The entity is called an issuer. In exchange, the issuer will provide a bond. The bond will include a promise to pay out a predetermined interest rate over the life of the fixed income product and to issue full repayment of the principal when it comes due. A lot of bonds provide returns that are tax-free. Bonds help parents to keep capital intact as they make money.
Home Equity Builds Financial Security
Home equity is another vital aspect of creating a bountiful nest egg which may be passed down to a child or utilized to help a child when he or she reaches adulthood. Most parents get mortgage loans when they buy a property. As they pay down their mortgages, they accumulate home equity. The more home equity, the better. It’s possible to borrow against home equity if it’s necessary. If it isn’t necessary, a home may be sold someday. It’s if owned outright (that means full equity), almost all proceeds from the sale will pass to the homeowner, rather than to the bank that issued the mortgage loan. Only fees related to the sale of the property will need to be paid out.
When parents embrace cautious and organized financial planning, which is designed to help their children enjoy secure futures, they are showing their love. While financial planning may seem dry and full to some, it is always important. Parents who carry out child-centric financial planning are caring and responsible moms and dads. They are taking care of what matters most.