If you are already a parent, you will understand just how expensive it is to raise a child. Should you be planning to have children in the future, you need to prepare yourself for the financial implications of that decision. Besides the everyday expenses incurred by having a family, there are the costs of things such as extra curricula activities, play dates, medical bills, and the big one, college, to consider. Other than opening savings accounts for your children, you may also want to consider investing some cash to reap the benefits in the future. No matter what stage of parenthood you are at, it is not too late to invest wisely to create a stable financial future for your progeny.
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The 529 college savings account
As the title suggests, this is a very specific type of investment and allows parents to save money in an account that is tax-free as long as the money is put towards college tuition fees. These are state-sponsored savings accounts, and there are several types available offering different rates, fees and ways to be flexible.
A child savings account
This type of account is less about the interest that is accrued, and more about teaching your children to be responsible with money. A dedicated child savings account differs from an adult’s savings account in that they usually do not have minimum account balance requirements, and smaller fees are incurred or sometimes waived completely. The accounts may also be accompanied by child-friendly literature, teaching you child how to make the most of their savings account. These accounts can either be opened in your name, or your child’s name.
Life insurance is an advised and is further a sensible investment to ensure your children are looked after financially should anything happen to you or your partner. The two main factors that need to be covered in your life insurance policy are that in the first instance large bills, such as a mortgage, will be paid off, and secondly, family protection that leaves money for your family to live on in the event of your death. The most basic option is term life insurance which sees you selecting the amount of money that will be paid out, and the period you want the policy to cover. Should you die within the term that is covered the amount selected will be paid out.
Investments in any capacity should be considered carefully and it is always beneficial to seek independent financial advice, whatever your investment plans may be.