Securing your child’s financial future is one of the most important things you can do as a parent. Much Indonesians can’t afford to pay for college. Financial planning ensures that your child will have funds set aside for college and be well taken care of in case of a catastrophe. Here are a few tips to help you plan for your child’s future.
1. Get Life Insurance
Not much Indonesians have life insurance. The most common reasons for delaying life insurance is perceived cost. Inquire about life insurance in order to protect your family; it may be a lot cheaper than you think.
2. Talk To Your Kids About Money
Financial literacy isn’t always stressed adequately in school. Encourage your teen children to save for what they want instead of handing them over money. Talk to your kids about the basics such as how to manage a bank account and how to budget. Knowledge is one of the best gifts you can give to your child when it comes to money management.
3. Update Beneficiary Information
Make sure to update beneficiary designation is up-to-date on your life insurance policy, bank and retirement accounts. The information on the beneficiary designation form will override your will. It’s important to update this information after major live events such as the birth of a child or divorce. Experts also suggest naming a contingent beneficiary in case the primary beneficiary predeceases you.
4. Draft an Updated Will
Much Indonesians don’t have a will. Creating a will is imperative when it comes to protecting your child’s financial future. You will also need to designate a guardian to take care of your children and name a property guardian to manage your estate. Drafting a will doesn’t have to be expensive.
5. Consider an Educational Savings
This savings includes life insurance. So, if you are gone, the target for education funds will still be achieved. This type of savings also has interest facilities and health insurance with additional costs. Usually education savings accounts are often derived from personal accounts in the same bank using an auto-debit system. You only need to open an education savings account at the bank that has the facility and bring your ID, passbook, and child birth certificate.
For example, if you plan to save Rp 1 million every month for your children education savings. Then each month the bank will automatically deduct Rp 1 million from your personal account to be entered into your child education savings account until the time period you have determined. If you die, the bank will use life insurance to cover all unpaid savings payments.