The average tuition fee from 2019 – 2020 is more than $40,000 per year. Planning your child’s future is a sign of responsible parenthood. You need to start as soon as possible and have an actionable plan for college education. Finding investment options for your child right after marriage is a good idea. Still, many people wait until they have a baby.
However, going to college and buying a car are not the only things you should worry about. There are several things you need to plan when your child is little. If you are new to parenting, then take a look at our top4 tips on how to plan your child’s future.
Work On A 529 Plan
You probably know the answer to, “what is a529 plan?” but here is a refresher. These are savings plans sponsored by the government where you can contribute your share through your income tax. When you withdraw from your plan, it will be free of tax deduction. This plan is best for your child’s education, but it’s not limited to your state only. If you think other states have more benefits, you can open a 529 plan with them.
Invest In An Eligible Savings Bond
Putting money in an eligible savings bond is a low-risk low return investment. Since you are saving for your child’s future, its best to be safe. However, the interest rate is substantially low, so you need to start as soon as possible.
Put Money In A Custodian Account
As your children get older, their demands will increase. The role of responsible parents is to accommodate all reasonable requests. One of these could be a car but paying a hefty amount upfront is not easy for many parents. Therefore, it is best to put money in a custodian account and slowly add more finances. When your child turns 18, the account ownership would be transferred, and the money can be utilized for education or other purposes.
Finally, Prepare For the Worst
You might not have considered this scenario, but it is equally important as your child’s education. The state of New York ensures that every parent of a minor child has a will. Incase parents pass away, children are prone to fight over property ownership. Not writing a will can have disastrous results and split up your one big happy family.
Having your family lawyer draft a concrete will that distributes your properties equally and business is necessary. However, you should make sure not to leave money directly to your minor child. An asset left to a minor is to be managed by the court until the child turns 18. The best practice is to have a testamentary trust managed by a family member, and this will ensure your child does not blow off your hard-earned fortune into thin air.