There’s no question that being a parent is one of the most rewarding jobs there is. There is also no question it’s one of the most expensive. Many may think that providing financially for your children ends when they turn eighteen but for most parents that is just not the case. In fact, a new study by Merrill Lynch and Age Wave reports that parents in the U.S. continue to spend $500 billion annually on their adult children, ages 18-34.
So how do you manage your money with your children, through their young lives and beyond?
Start With Savings
Your emergency fund should have anywhere from three to six months worth of expenses saved. Let go of saving for retirement or your children’s college fund until you have that safely socked away. Then you can begin to plan for the future knowing you are secure.
Don’t Ditch the Retirement Fund
It’s easy for parents to put their own future on hold as they help their children with education funds, wedding planning, even rent or bills later on in life. This can mean you are putting yourself in a dangerous place. Consider what will happen if you are not adequately prepared for retirement – your children may end up bearing the burden you were trying to avoid. We can help you plan for retirement while still maintaining balance as a parent and provider.
Consider a College Fund
Paying for college can be daunting to parents, especially if you have more than one child. Starting early can help alleviate stress and financial burden later as you break down the cost into more manageable amounts. One of the best ways to invest for your child is through a 529 college fund. A 529 savings plan is one, “in which any investment earnings are free of taxation, though the original contributions are not deductible. The money isn’t taxed when taken out of the plan, as long as it used for qualified education expenses.” Other options besides a 529 are also available so it’s important to take into account your financial situation and which plan works best for your family.
Talk to Your Kids About Money
Not only is it important to set examples of saving, budgeting, and spending for your children when they are young, but you also need to have clear boundaries and expectations as they get older. Whether you are loaning them money for an emergency, for living expenses, or giving them a gift – be clear on what your expectations are for repayment and/or if you are planning on providing any additional help later.
Estate Plans for Optimal Financial Planning
Estate planning can help you set up a living trust that takes into account your financial situation, your goals, and the administration of your assets to your heirs after you pass on. Not only can you set up accounts that are clearly earmarked for your goals in life such as retirement, college funds, or inheritance for your children, but you also have the peace of mind knowing that your assets are protected from creditors, life events such as divorce or remarriage, and that your children are financially provided for in the way you think best.
If you have questions about how an estate plan can help you manage your money and your family’s legacy, attend one of our FREE seminars for a consultation with an attorney.
