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Tuesday, 31 October 2017

3 Things to Consider When Planning for Your Child’s Financial Future

Our friend Sally a freelance writer has contributed to our blog once more.  Sally is a former Manager of a care home, learned how demanding and complex caregiving can be. While it can also be rewarding, caregivers need all the help and support they can get.

3 Things to Consider When Planning for Your Child’s Financial Future
Super Baby
Valeria Zoncoll

When considering your child’s financial future, whether he or she is a 1-year-old or 10-year-old, many expenses await. According to one of the latest estimates, the average cost of raising a child from birth to age 21 is £230,000. From education, to clothing, to unexpected expenses, it isn’t cheap to raise a child. For parents suffering from a life changing (mental) health condition, it is often a priority to set aside extra funds to prepare for a child’s financial future. While the future of a health condition may be uncertain, it is comforting to know that no matter what, the child will not struggle financially.

If you’ve considered saving and investing for your child’s future, it is overwhelming to think of all of the areas that require planning. To help you organise and create a better investment plan, explore three of the main categories that require the most urgent attention.

Everyday expenses
Even though it may seem strange to include everyday expenses when investing for your child’s future, clothing, food, hobbies, and other purchases add up rapidly. As you consider how much to invest and save for your child, figure out how much you are currently spending on everyday expenses, and multiply by the number of years you would like to cover. You should also decide whether you’d like to set a goal of saving for 100% of these purchases, 90%, 80%, and so on.

Education and living expenses
Education costs (and associated living expenses, if applicable) are among the most significant costs associated with raising a child to adulthood. Depending on the school you select, and your child’s living arrangements, tuition and housing can easily reach thousands to tens of thousands of pounds. Prior to investing and saving, make tentative decisions about the future of your children’s education. Decide on factors such as where they will likely attend school, where they will live, and how much of their tuition you would like to cover.

Early adulthood support
Transitioning from school to the working world is a challenge for many young adults. Depending on the age of your children, you may also want to consider setting aside funds to assist them in early adulthood. These funds can be used to cover living expenses that parents often offer assistance with. While it isn’t 100% necessary to set aside funds for this purpose, it is important to consider when creating an investment and savings plan for the future.

Creating a comprehensive plan for your child
Although the future can feel uncertain at times, your child’s financial future doesn’t have to be. The first step to creating a comprehensive savings and investment plan for your child/children is to list out the expenses you would like to cover. Once you’ve created a plan to save for each of these expenses, you can have the comfort of knowing that no matter what the future holds, your children will have everything they need.
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