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As parents, we want to provide the best possible opportunities for our children. In reality, it can be complicated enough at times to navigate this ever-changing world for ourselves. Figuring out how to help lay a solid foundation for our kids’ financial futures adds a whole other level of complexity. As with many financial endeavors, being purposeful and consistent are the keys to success.

Here are a few things to keep in mind:

Teach financial literacy: Educating your children about money management and financial literacy is an investment that will benefit them throughout their lives. Teach them about budgeting, saving, donating to charitable causes, and the importance of delayed gratification. Encourage them to set financial goals and help them understand the value of purposeful spending and investing. Help them to focus on their decision-making process instead of simply the end result, spend versus save. Teaching them to go through a process of weighing the pros and cons of each financial decision will undoubtedly be one of the best money lessons they will learn. By instilling these good financial habits early on, you empower your children to make their own smart financial decisions.

Talk about money: Money should not be a taboo discussion. Share your financial successes as well as your mistakes so that your children can learn from the path you have taken. These discussions should be tailored to their age and level of understanding. Actions like funding piggy banks, donating to charity, mowing the lawn for money, saving for a big purchase, getting that first job or opening an investment account are all great age appropriate financial events that can kickstart money discussions.

Start saving early and contribute regularly: Time is a powerful ally when it comes to compound interest and long-term investment growth. If you decide to fund accounts for your children’s future benefit, begin by establishing a disciplined savings plan and contribute regularly. Even small contributions can grow significantly over the years.

Prioritize education savings: Investing in your children’s education is a valuable long-term strategy. Consider opening a 529 college savings plan, which offers tax advantages and allows your savings to grow tax-free. Contribute consistently and take advantage of any state tax deductions or credits available.

Establish a trust or custodial account: Creating a trust or custodial account can be an effective way to transfer wealth to your children while maintaining control and minimizing taxes. A trust allows you to outline specific conditions for asset distribution, ensuring that the wealth is managed and distributed according to your wishes. A custodial account, such as a Uniform Gift to Minors Act (UGMA) or Uniform Transfers to Minor Act (UTMA) account, allows you to transfer assets to your children, which they can then take control over when they turn 18 years old. Keep in mind that contributions to these types of accounts are subject to IRS gifting limits.         

Maximize retirement savings: While it may seem counterintuitive, prioritizing your own retirement savings is essential. By securing your own financial future, you ensure that you will not become a financial burden to your children later in life. Maximize contributions to retirement accounts such as 401(k)s or IRAs and take advantage of any employer matching programs. A secure retirement enables you to provide better support for your children as they navigate their own financial lives.

Building financial stability for your children requires careful planning, disciplined savings, and prudent investment decisions. By implementing these strategies, you provide your children with the invaluable gift of financial security and knowledge that will empower them to thrive in their own lives.