Help Your Children To Study Finance:- The cost of raising a child from birth until age 18 is staggering. According to the U.S. Department of Agriculture, it will cost you about $250,000 if you have a child born in 2016. This figure does not include college expenses or an inheritance for your child.
Even though it’s an expense that many parents can’t fully prepare for, there are ways that you can invest in your child now so that they will be set up for success later in life. If you want to help your child avoid going into debt from student loans once they finish school, investing in them now is the best way to do that. Consider these four reasons why you need to invest in your children right now if you want them to be successful later on in life:-
Help Your Children To Study Finance
1) You Can Help Them Build Their Credit Score
One of the biggest expenses that your child will have in their lifetime is their mortgage. While it is possible to rent their entire lives, many people want to buy a home and having a mortgage will likely be part of that equation. Two things that you can do today to help your kids build their credit score are to open a credit card in their name and get them a secured credit card.
When you open a credit card in your child’s name, they will be able to start building their credit score. However, they need to understand that they need to pay off the balance in full each month or they will hurt their credit score. If your child doesn’t have any income, it is unlikely for them to get approved for a credit card on their own. You can get them a secured credit card that requires a refundable deposit.
2) You Can Help Them Establish A Savings Habit
It is never too soon to start helping your child build up their savings. Even if they are a toddler, you can open a savings account in their name and start depositing money into it. You can also help them start saving for specific goals they might have. For example, if they want to go to Disney World when they are older,
you can help them start saving for that now. You can also help them save for college by opening a 529 savings plan in their name. If you start saving now, it will be a lot less expensive for you to put money into your child’s account rather than getting them a loan.
3) You Can Help Them Pay For College
The cost of college has risen exponentially in recent years, and many people worry that their child won’t be able to afford it. One way to help your child get through college without taking on a ton of student loans is to start saving for it now. There are a few different ways that you can do this. First, you can open a 529 savings plan and name your child as the beneficiary.
You can also open a Roth IRA in your child’s name and contribute to that. When you contribute to your Roth IRA and/or your child’s 529 savings plan, you will get tax benefits and your child will be able to withdraw that money tax-free when they go to college. You can also start saving money in a regular savings account and put it toward your child’s college fund.
4) You Can Help Them Ensure They Are Financially Independent
The best thing you can do for your child is to make sure they are financially independent. That means they are able to provide for themselves without relying on you for money. One of the best ways to do that is to start helping them build their financial skills now.
One way to do that is to sit down with them and go over their financial statements. You can also help them open a savings account and deposit money into it. When they are in their 20s and 30s, they will be able to use that money to buy a car and a house. If you start investing in your child’s financial future now, they will likely be able to live a more comfortable life than you did.
5) You can grow your child’s net worth.
When you invest in your child, you are investing in their future net worth. This is especially true if you invest in their retirement account. If you choose to open a Roth IRA for your child, you will be able to withdraw those funds tax free when the child retires. If you instead choose to open a 529 plan for your child, you will be able to withdraw those funds tax free to pay for your child’s college. By investing in your child now, you can have a positive impact on his or her net worth in the future.
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Conclusion
When you start investing in your child’s financial future as soon as they are born, you can help them avoid going into debt later in life. You can help them build their credit score, establish a savings habit, pay for college, and ensure that they are financially independent. Investing in your child now will help them avoid debt and be more successful later in life.