Everyone wants the best for their kids, but sometimes it’s hard to know exactly what that means in terms of action.
What are the actual steps you can take to set your kids up for financial success?
Here are five big ones:
1. Secure your own mask first.
* Get life insurance that covers funeral expenses, debts, and lost income
* Get your own retirement on track so your kids won’t have to support you later in life
* Create an estate plan and will to minimize taxes and make sure everything is organized so that it’s as easy as possible when the time comes
2. Open an RESP
* Benefit from government grants
* Minimize a big source of future debt
* Give them as much opportunity as possible
* If they don’t end up going to school, you haven’t lost anything, and there are easy ways to make use of the money, like rolling it up into your RRSP
3. Get them Critical Illness insurance (ideally a policy where you’ll get your money back if it goes unused)
* Ensures you can take time off and afford the best care if your child falls ill
* Huge for peace of mind
* And if all goes well and you never have to use it, you get your money back after 20 years, which you can use to help with a wedding or a house down payment or whatever else they might need
4. Get them Life Insurance
* It’s easier to get coverage when kids are young and they’re less likely to have something that would make getting insurance more expensive (their blood pressure tends to be good and they rarely smoke, for instance.)
* You can design the policy to get the minimum amount of coverage now, but that also guarantees their future eligibility for more coverage later at the best rates possible
* Again, big for peace of mind
5. Talk about money with them
* Be transparent about your financial situation (where age appropriate of course, but too often parents never talk about money at all in a well-intentioned effort to protect their kids or shield them from the stress. But the end result tends to be kids who don’t really know anything about money, because their parents never really talked about it.)
* Use an allowance to teach them about how money works, why they need to save it up for the things the want to buy, why being frugal is so important, and how to get started early with investing
I know this list is long, and if you haven’t done all these things already, you definitely aren’t a bad parent or behind everyone else or screwing it all up. I have two toddlers at home and I know how hectic parenting life can be.
But the earlier you get started with tackling this list, the more likely it is that you’ll be able to afford help your kids do all the things they want, the less likely it is that money will be the thing that limits their opportunities, and the better prepared you’ll be for the curveballs life throws your way.
If you’d like to talk about any of the details or how to tackle specific items, feel free to book an intro meeting with me and we can go from there. Helping parents get their kids set up for success is one of the best parts of my job.