Last Updated Aug 9, 2011 9:54 AM EDT
How do you secure your kids' financial future? Here are three things you need to do now:
1. Draft a Will
Drafting a will is one of the most important things you can do for your kids. Why? It's the only legal way you can name a guardian. Without this document, a judge decides who will care for your children if both parents are no longer living. And while you may have told your sister, for example, that you'd like her to do the job, a judge may decide your little ones are better off living with a different relative.
A will is also helpful even if just one parent passes away. A lot of people don't realize that without this document, many states divide the assets between the surviving spouse and the children. The kids' portion is then administered by a court-appointed guardian under court supervision until the children reach 18 or 21 years of age (depending on the state). In other words, you may have to jump through some hoops and request money from the guardian just to help feed your kids.
2. Purchase Life Insurance
Unless you already have enough funds in the bank to raise your kids and pay for their college education, you probably could benefit from buying term life insurance. This is a relatively inexpensive way to make sure your children have the money they need in the horrible event that the breadwinner in your family is no longer around to provide for them. The proceeds from a policy will never replace the loss of a parent, but it will at least give your loved ones one less thing to worry about.
3. Start a College Savings Account
We all know college costs a small fortune. (Click this link to see what the tuition bill will look like when your child hits 18.) Still, many parents don't save for this expense until their children are in middle school or are even older. To avoid stress and huge student loans later, do everyone in your family a favor and start saving now. Even if you contribute just a small amount every month, your contributions will grow and your kids' future debts will shrink.
What do you think makes a good a parent?
Stacey Bradford is the author of The Wall Street Journal Financial Guidebook for New Parents.
Baby A image courtesy of Flickr, CC 2.0.
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