Why Planning Your Child's Future is Important

You watch your child grow from newborn to toddler then from preteen to young adult. But at what point have you considered planning for their future? The days seem to pass by slowly but the years fly by so quickly. One day, you're wondering if they will ever start acting their age and when they do, you begin to wonder if you're ready for it.

When it comes to planning your child's future, the secret is to get an early start. It's a painful thought, but even in grade school, you'll have to face the fact that sooner or later, they are going to enter a life on their own. Whether it's off to college or entering into a family owned business, becoming independent is inevitable.

Getting a jump start on your child's future is as easy as having a distinct plan whether it be for marriage, college or for preparing them for entering into a business or technical occupation. Your mindset should be to figure each objectives time frame.

Your first consideration should be their continuing education beyond high school as it's the most dependent upon on actual time frame. Let's face it, once a child moves from middle school to the dreaded high school, it's way too late to consider how you will pay for college. Even the most successful of students who have been awarded with scholarships will need the financial assistance of a parent for a proper college education.

In the United States, investing in a 529 plan is the easiest way of ensuring your child will have the necessary funds for college. Every state has one of these plans operated by the IRS. Significant tax breaks are allowed to parents investing in one of these plans and, although, each plan may vary in it's operation, they still have the same objective of funding a college education.

Some of these plans operate similar to a 401k or an IRA where you invest money in stocks, bonds and mutual funds. The drawback to a plan like this is dependent upon how well the invested funds are returned and can be somewhat risky. Entrusting your investments to a competent investment adviser can be your best option when considering this type of plan, especially if the stock market isn't your forte'. An adviser can guide you to the most profitable, and less risky, types of investments for good return on your money.

The other type of 529 plan is the prepaid type, where you are directly prepaying your child's way through an instate public college education. These funds can also be transferred to private colleges as well and hold much less risk. Starting early enough on a plan like this and you should have most if not all of the funds in place for your child to attend the college of his or her choice. Even if you get a later than normal start, at least you'll have partial funds available to work with. Although it's never too late to think about it, the earlier you do will make the process easier on both you and your child.

Educational institutions can operate with either plan but not both of them. This is why it's so important to get an early start. By doing some research, you would be able find out which plan is best for your budget and your child's future. Enrolling in one of these plans is as easy as contacting the 529 manager of your state for prepaid or an investment adviser for the savings plan.

Once you have your child's college education finances in place, you'll want to consider having a financial plan concerning their marriage. As there really isn't any way of predicting when and where they might meet their future bride or groom, it's important to have a fund set aside for such an occasion. Granted, a wedding doesn't cost anywhere near what a college education does, it can still leave a bank account in poor shape without proper planning.

For a child who has aspirations of a technical trade, proper thought and planning will aid here as well. Although a technical school won't come with a price tag as high as a university will, they still aren't free and you usually get what you pay for. Once again, thinking ahead will ensure the funds are available with proper investment or saving.

Active participation in how your money is invested which can be your biggest asset when planning your child's future. This process is one that spans years, so keeping in close contact with your financial adviser is important. Question him or her about the different programs they are investing in. You don't want to find out when it's time to use the funds that enough is not available. Monthly updates on the return of invested funds should keep you and your adviser on the same page and headed in the right direction.

Proper planning is the key to ensuring your child's future. Starting the plan too late will only make it more difficult to achieve the funds required to make the plan work. Once you have the plan rolling, don't dip into it for other uses other than what it is intended for. And stay informed of how your plan is returning on your investment. By following those three rules, you'll ensure your child's financial future without destroying yours.

*529 Plan Details, SavingForCollege.com