We loved reading Jacqui Brauman’s advice last month on the various legal documents we should have as parents – things we never really make the time to do, but really should. If you missed it, you can read it here.
So we invited Jacqui back to provide guidance on some other areas we often don’t like to think about, but should.
There are so many things parents have to think about! Planning for your child’s future is not the least of them, and it’s never too late to start. According to MoneyControl.com, 72% of parents prefer saving for their child, over protection of assets and legacy planning. Also, for 81% of parents, education is at the foremost of their minds in terms of their child’s future.
So, securing your child’s future is one of every parent’s primary goals. Protecting them from threats, and ensuring they get an education, and possibly higher education, are both worries that you would often think about. One of the big worries is also what will happen to your child if you were no longer here, either because you were recovering from an accident in hospital, or if you died?
Here are a few points to be considered while planning for your child’s future:
Identify Financial Requirements
The first step should be to identify the needs of your child, and how much they are going to cost. Education, school fees, extra-curricular activities, excursions and all associated equipment are all costs that parents have to insure for bringing up their children. Costs will rise whilst your child is growing up, and should also be taken into account. Identifying roughly the amount you’re going to need to raise your child is a good start to knowing how much you need to save or be earning.
Have Adequate Protection
Assess your insurance needs – life insurance, income protection insurance, disability insurance and health insurance. With this step, you will start to need some professional help. Engaging a financial planner to this whole process can help, or an insurance broker can look at individual requirements. Either way, make sure you have adequate coverage so that you don’t place extra stress on your family if something should happen to you.
Write a Will and Appoint a Guardian
Don’t leave your family’s future up to chance, or to the government. As well as ensuring your spouse will be adequately provided for, you are likely to want to allow some inheritance for your children in a trust. By doing so, you reduce the risk that your children will lose their inheritance if your spouse changes their Will or meets someone new after you’ve gone.
You also appoint a guardian for your children in your Will, so that you control who will raise your children if you can’t – you don’t want the government to place them in foster care, or have your family fighting over them in Family Court!
Grow Your Wealth
Don’t just save with your child’s education in mind. Have a whole strategy in mind, and visit a financial planner to establish this. The wealthier you get, the more you are able to provide for your children, both whilst you are alive, and also if you are no longer here.
Teach Your Kids About Money
Piggy banks – remember those? Our ability to make good personal finance decisions evolve from what we learn as children. The earlier your children can learn about money and make mistakes, the better decisions they will make as they grow up.The first step is to learn how to save for goals from limited earnings (pocket money). Making sure your child is aware of various aspects of personal finance will help them to become self-dependent.
Guest post by Jacqui Brauman, Principal Solicitor at TBA Law
Accredited specialist in Wills and Estates with over 10 years experience in the legal industry.
03 5794 2334