One of the best gifts a parent can give her child is an early savings strategy to pay for the child's college or other expenses. Here's a simple plan that will give you flexibility and security.
One of the best things you can do for your child is to start a savings plan using a whole life policy. The money could be used for the child’s college, the child’s retirement, or both. Don't put it into a 529 plan, because if the money is put toward anything other than college, it could be subject to IRS penalties and taxes.
When you save money for your child’s future using a whole life insurance policy, there are no 529 plan restrictions and pitfalls. The money is also safe from market losses, and will also ensure that your child will have life insurance benefits. As your child gets older, and the money in the policy grows, you can talk about it to your child and use it as a personal finance teaching tool.
Almost everyone will agree, the earlier you learn about personal finances the better. For many of you, the toughest personal finance lessons you ever learned were learned the hard way. It's not fun to learn by doing when you're learning about getting in debt over your head, not saving enough, and waiting till it’s too late to start saving.
Start saving for your child’s future using a whole life insurance policy. It doesn’t matter whether it’s $100 a month or $500 a month, as long as you start. Then use that policy as a teaching tool and you will help your child avoid a world of financial grief and aggravation that awaits so many. When the child grows into adulthood and is earning a living, he or she can take over making payments to the savings plan. Later, when their peers are worried about finances, your child, by contrast, will be standing tall with confidence because of the financial foundation you started. Someday, your child will likely say... “WOW! Thanks mom! Thanks dad! I really appreciate what you did, because now I don’t have to worry like everyone else.”
Absolutely, make sure you come back here next week for another edition of The Alemian File.