It’s safe to say that we all want what’s best for our kids. We also all want them to have a better life than the one we had growing up. We want them to struggle less, have more choices and more opportunities available to them. It’s part of being a parent and part of wanting to live “the American Dream.”
But wanting your kids to have more than you had is the just the first step in making this happen. The second, and more difficult step is planning for it, whether your child is a newborn, a preschooler or 18 years old. There are things we can all do to create wealth for our children or at the very least put more money into their hands and give them a better start.
Here are two valuable tips to help you give your children a better financial start:
Fund A 529 Plan And Help Your Child Get Out Of College Debt Free: I know you have heard this one before, but providing your kids with a college education is the most important thing you can do to help them financially. There are few jobs today that do not require you to have a college education.
While going to college is important, it is also expensive. According to the College Board, the average cost of tuition for 2012–2013 was $29,056 at private colleges, $8,655 for state residents at public colleges, and $21,706 for out-of-state residents attending public universities. When you add in living expenses, books, and other fees, the cost of college can add up to a small fortune over the course of several years. As a result, most students will have take out many, many loans just to attend college.
Giving your child the chance to start their life without college debt will give them a significant head start. It will make it easier for them to save more of their take home pay, buy a home at a younger age and have the funds to start a business which is the path to financial success for many Americans.
According to experts, a 529 plan is one of the best ways you can save for your child’s education. In a 529 plan, the money you put aside will grow tax free, and you won’t have to any pay taxes when you sell the assets in the account, as long as the proceeds are used for college expenses. What’s better is that the 529 has almost no restrictions on income, age, or who can be the contributor. That means anyone can open and a 529 college savings plan including parents, grandparents, relatives, and family friends.
Get Your Papers In Order And Pass Something On To Your Kids : Whether it’s jewelry, a house, money in a savings account or all of the above, most people have something of value they can pass on to their kids. Passing on something of value to your kids is an important step towards creating generational wealth. To do so effectively, you need to create a will and/or trust.
This is a process often overlooked by many parents because death is not something we want to think about. But anything can happen to any one of us at anytime, so don’t wait another day to take care of this. Moreover, the cost to create a will and/or trust is not prohibitively expensive. If you are willing to spend some time and do it yourself, it will cost about $30 for a book or software. There are also websites can walk you through it for about $60. If you hire a lawyer, it will cost you about $2,000.
Spending the time and money to create a will and/or trust is definitely worth it. Your kids will not get what you have worked for over the years if you do not put it down on paper. This goes for married couples too. In most states, your spouse is entitled to your wealth, not your kids, even if that spouse no longer lives with you. Also remember that surviving spouses can remarry and that new spouse is more likely to end up with what you have worked for over the years than your kids if you don’t have a will.
If you are not married and die without a will, things can get messy still because it will take the courts a year or more to figure out what’s in your estate which will likely eat into money that should have gone to your kids. So don’t let this happen to your family or your family’s opportunity to build on wealth.
Notoya Green is an on-air parenting expert and mother of two-year-old triplets. A former law attorney, Notoya put her law career on hold to become a stay-at-home mom to care full-time for her children. She now shares her experiences at Triplets in Tribeca.