When you have children, you also have a lot of responsibilities. One of these is planning for your kid’s future. If you haven’t sat down and thought about this yet, here are three essential tasks you need to get started on right away.
Buy Term Life Insurance
Having a life insurance policy may not be something you think about every day, but it is a critical safety net for your family. Term life insurance is a protection plan that gives your family money in the event of your death. You purchase plans based on the amount of financial coverage you want and how long you want the policy to be in place.
When you establish the policy, you designate who you want to receive the money. This person or persons are called beneficiaries. It would be best to choose someone you trust who can make wise decisions about how the money gets spent. If you have young children, you can also set this money aside in a trust. This is a fund that holds onto the money until a child reaches a certain age.
When you are ready to purchase life insurance, you can find life insurance online or ask friends and family for referrals. You complete a lengthy application and may or may not need a medical exam. You have many options for pricing and plans, so pick one that works best for you. The longer the policy is in place, the longer your rates are locked in.
Write a Will
No one enjoys thinking about what happens with their family and belongings if they die. However, being a parent requires these unpleasant responsibilities. Creating a will ensures that your children always have a guardian and that their inheritance is clearly defined. Without this document, this decision is the responsibility of the court system. Wills also designate what happens to your belongings, such as vehicles and your home. These carry a lot of cash value, so designating who receives these items and their proceeds need to be laid out to avoid family arguments.
Establish a College Fund
The costs of sending a child to a University increase each year. By the time yours is ready for school, the expense may be equal to or more than the cost of your home. To offset this amount, start saving early. State-funded saving plans, called 529 plans, allow your employer to take money from your paycheck and deposit it into this account. The money grows tax-free and may allow you to be eligible for additional tax deductions. tax-free
If you aren’t interested in this type of account, there are other savings options available. You can set money aside in a 401K plan through your employer. These plans are excellent because employers often contribute to them as well, and the money is only taxed when it’s removed from the account. You also have the option of refinancing your home or taking out a home equity line of credit. These options are great if you have lived in your home a long time and there is a lot of equity available.