Every parent wishes the best for their child and to secure their future as much as possible so they don’t get derailed from following their dreams and living a healthy life.
This makes the role of parents a very hard job as you become heavily responsible for future-proofing your children and the whole family against unknown and unpredictable situations. While it may sound bleak, but you may not be around forever to take care of your children’s financial needs. A lot of parents realize this and start planning to instill the best education system has to offer for their children to allow them to achieve independence and growth. No parent should ignore their children’s health and medical needs at any point in their life, making it essential to see that you’re able to secure medical treatment for your family at any time. We’ll be discussing the essentials that you need to work on and prepare for a better future for you and your family.
While many families may have health insurance, it doesn’t mean that they have the right and secure health insurance for them. Being careful is better than sorry, especially when it comes to health and medical needs. As mentioned in the expert Beacon Point Insurance guide, having a local independent insurance advisor can help you in selecting the best insurance plans for you and your family. You and your family’s medical and hospital expenses without health insurance can be quite devastating financially. It’s quite recommended to have your whole family included in a single health insurance plan, keeping the costs and expenses at a much lower rate than individual plans.
Education is expensive and it keeps getting more expensive along with inflation, leaving many students in crushing debt. 529 plans are qualified tuition plans that help you open an account to deposit potential education expenses without applying any taxes if it grows. The key to the 529 plan is making sure that the money is only touched when higher-education expenses are included. Different states, agencies, and institutions provide the 529 plans under their sponsorship.
The 2K Rule
A savings account reserved for education is a very good idea, but you may still not have a clear idea of how much you need to save and how. A popular method is the ‘2K rule’ which suggests multiplying your child’s age by $2,000 to get an estimate of the money needed to be set aside to cover 4 years of college in a public university. While it may seem a bit broad and generalized, it can help you get a clear idea that planning as early as possible and getting benefits for saving is very important in securing your children’s future. Most people couple their savings with the 529 plan tax-free benefits to get the optimum return-on-investment.
Since a family is mainly dependent on one or two incomes coming from the parents, losing that income would mean that the family’s quality of life would deteriorate drastically. When the family loses a loved one, the impact alone is quite enough, but the financial pressure can even make it much worse; taking out loans, selling homes, and moving. Life insurance has the potential to pay for the hefty financial debts that resulted from losing a parent, such as a student or medical debt. Most life insurance payouts are tax-free with no deductions. Since most life insurance companies provide advance benefits, your loved ones need not wait for a long period to cover the costs. It’s considered by many a safety net that can help your family out even if worse comes to worst.
The Roth IRA is similar to 529 when it comes to tax benefits, but it’s widely known as a great retirement savings account. The difference is that it can be also used as an education savings vehicle alongside retirement plans. Contributions or deposits are made after-tax and remain tax-free when you withdraw them from the account, in addition to any investment gains, as long as you’re older than 59 years and a half. To be used as a way to fund college expenses, the Roth IRA has to be 5 years old for its funds to be used without taxing or penalties. This is considered not just a safety net for your children, but also for you when retiring.
It’s ok for families to worry about their future, but they shouldn’t be overwhelmed by the variety of routes possible and rather focus on building the basic blocks first. Ensuring that your family has its education and health secured as much as possible is essential in its growth and development.