Preparing your children for financial stability
When children are young, college and cars may be the last thing on a parent's mind, but according to Colleen Giffin, a financial advisor at Beall Financial, not planning ahead can set your child up for financial failure.
“One of the things that we can impart in our children is a good sense of responsibility and options when we think about money because if we always deal with it from an emotional standpoint and not from a tools and resource standpoint then we’re actually kind of shortchanging ourselves," Giffin said.
She also said it's never too soon to start preparing for your child's future.
"You know some ways might be to open up a savings account for the child and actually let them see it grow. Let them see it earn interest. Let them you know put some of their allowance into it while spending some of their allowance. You know figuring out what that balance looks like so they can save for tomorrow themselves but they can also spend some now today."
Stephanie Clemmons' son, Steven, is only two now, but she said she started saving for him before he was even born.
"To save for college or braces or a car when they become a teenager," Clemmons said.
Teenage years may seem far off for Steven, but Clemmons wants to be prepared when the time comes.
"When they're in school, high school age, that last year of senior is very expensive with graduating expenses. You can't save any money during that time and it's right before college," Clemmons said.
While savings accounts are popular, parents can open up a 529 or Coverdell education account which both encourage saving for future college costs, or a uniform gift to minors account which can be used to cover any future financial obligation. All options can be beneficial as long as the child understands the purpose for saving.
“You need to help your children think through what that money is for, whether it’s to help buy their new car, whether it’s to help pay for their education, start a business," Giffin said.
While money will help with financial burdens as a child matures, it's the knowledge of how to save and when to spend that will last a lifetime.
“That conversation, that thought process is gonna be the greatest gift we can give our children because they have to start thinking for themselves and then we can help mold those thoughts into healthy decision making processes for our kids," Giffin said.
She also said a good rule of thumb is to teach your children to have enough money saved for at least three months of groceries, rent, and utilities in case of an emergency.