Knowing your child will be financially secure when growing up is something many of us consider a priority – and also something we worry about.
According to the Office for National Statistics 87% of us have reported an increase in our cost of living this year and as a mum of four money is a subject that’s never far from my mind.
Interestingly, research reveals the younger generation is becoming more and more financially savvy thanks to the rise in smartphone apps to help them manage pocket money and access online information.
Apparently 61% of children aged 10-15 use an app to manage their pocket money, but at the same time an estimated one in three Brits is thought to be financially illiterate.
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So, with the cost of living continuing to rise how can we ensure our children grow up secure and have a good knowledge of finances and how to manage money? This collaborative post reveals 4 easy ways!
1. Open a savings account for each child
Creating a savings account for your child when they are born can help you to give them a nest egg to start adult life. Currently, you can add up to £9,000 into an ISA, giving your child a tax-free lump sum when they come of age. Even small amounts placed into a Junior ISA can add up over time.
2. Create a written will
Every parent needs to have a will. Knowing how your assets will be shared and what will happen to your children is something you need to have written out legally to ensure they are protected both physically and financially in the event of your death, regardless of how old they are.
Writing a will shows you have thought about their future and are taking steps to protect them. When they are old enough, you can share with them what is in your will if you wish.
3. Have a retirement plan in place
A retirement plan is a must, whether you have children in your 20s or 40s. Not only does having a retirement plan tell your children you have put thought into what you want to happen, but you are teaching them good habits for how they need to plan for their own future once they become adults.
A good retirement plan will include a will, as discussed above, a funeral plan, accommodation requirements and what type of medical interventions you will need if applicable.
4. Encourage your children to be financially responsible
When it comes to finances and becoming financially literate, you need to be your child’s teacher. It is no good to allow them to enter the world if they have no concept of money or how to manage it.
From managing a budget to knowing when to take out credit and what different financial behaviours can do to their credit score, all of this is essential information that is better taught from an early age.
At a minimum, they need to know how to manage their budget to pay for all of their bills, how best to build a savings fund, and the importance of being financially savvy. You can help them with more complex issues such as schooling, the right life insurance, preparing their finances for a mortgage, and investments.
This is a collaborative post.