Parenting is a challenging yet wonderful opportunity for us to help create a better future. With two young kids running around at home breaking everything in sight, it’s hard for me to imagine a day when financial matters would actually mean something to them. But when that day finally comes, I want to make sure I leave them these five financial gifts.
Having enough saved for my own retirement. Having money to last the rest of my days does much more than eliminating my own financial worries. I want to have enough so that my kids never have a back-of-the-mind worry about needing to financially support me. This way, they won’t be hindered from making their own choices as they see fit. I also want to set a good example and show them it actually is possible to stay on top of your finances.
Have intelligent conversations about money. There are so many little nuggets of wisdom I’ve learned through the years of writing about personal finance I want to pass onto my children. And with solid finances myself, I could confidently tell them that these tips aren’t just theory but work wonderfully well in practice. Many of the strategies, such as saving early, Roth conversions or tax-loss harvesting seem like common sense to those who know about personal finance, but are relatively unknown to the general public and often life changing when implemented consistently. I want to make sure my kids know about them so they will have an easier time achieving financial freedom.
The tinkering needs to stop. I always have an urge to tweak my investment plan. I constantly entertain thoughts about adjusting my asset allocation, adding different investments with a slightly better expected return, rebalancing and even market timing. But tinkering will only increase the risk my assets will run out, not to mention the extra stress I endure every time I change my already very solid plan.
Save enough to pay for college for my kids. While everyone should think of his or her own retirement first, I believe that I will be able to save for college costs for my children and save for a comfortable retirement. The money will have to come out of current spending, but allowing my kids to graduate debt-free is one of the best gifts I can give them. This goes back to the freedom to choose their life’s plan I mentioned earlier. Without short-term obligations, they are free to work on what’s best for them over the long term.
On the other hand, I don’t want to give my kids so much money they’ll never have to work for anything either. It’s a powerful feeling to be able to make a living to support yourself. I don’t want to deny them that opportunity.
Convince them to save in a Roth account consistently. I would like my kids to have their own Roth account where they contribute to the maximum limit every year. Thinking about the heights your Roth account could grow to after multiple decades of investment is always fun, but maximizing their Roth account also tells me that my kids fully understand the power of saving early and saving on taxes, even if the numbers fall short of the rosy projections. It’s the saving mindset that will make them wealthy.
It will be a long time before I present my children with these financial gifts. But like most aspects of personal finance, starting early is the easiest way to achieve my goals. I have already started to make plans for the financial future of my children.
David Ning is the founder of MoneyNing.com.
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5 Financial Gifts I Hope to Give My Children originally appeared on usnews.com
