Finance Management

8 tips to help secure your children’s future

admin • 17 Sep 2023

Saving, investing and prevention are three essential concepts to pass on to your children. Find out how you can teach them and thus ensure they have a prosperous future.

If you have young children, you've probably already thought about how you can help them prepare financially for the future. In this field, there are many aspects that parents must consider to ensure their children's future and guide them on the right path.

Building a nest egg, ensuring stability in case of unforeseen events and instilling some basics of budget management are important steps towards their financial education. Discover eight tips to ensure a financially bright future for children.

1. Save money

Mutual savings is a way to save money for your children's future. This savings could have various purposes, from paying for university studies, helping to buy a house or facing the first years of working with low income. The Young Complementary Savings , for example, allows reinforcements at any time. You can stipulate an amount to transfer every month, to “fatten up” the account effortlessly and still benefit from the interest paid.

2. Take the opportunity to teach them how to save…

Savings account management is also an opportunity to teach them how to manage money and instill in them some savings basics. When they already have some understanding of mathematics, start involving them in the process. Together with the children, record each deposit they make on a sheet of paper and ask them to add them up and check the result. It is important for them to understand that, with small deposits, they will be able to save a good amount for the future.

3. …and teach how interest rates work

When the children have understood the concept of saving, you can take the opportunity to talk about the importance of interest in savings. Simply put, explain to your children that interest is a reward that the bank gives them for having the money saved in their coffers. If they are old enough to understand, you can show them the bank statement and how much they earn, for a certain period, in interest.

Once you have grasped this concept, you can move on to a more complex one: compound interest. Explain that the money the bank pays them will be added to the amount they already have in the bank and automatically invested in the following period, making the amount invested higher. Consequently, the money you will receive in the following period for interest will be greater.

4. Talk to children about money

Money should not be a taboo subject in the family. If you talk openly about the subject with your children, they will easily develop a healthy relationship with money. It is important to talk about the parents' income, where they spend their money and explain how they manage the family budget. By being transparent about these matters, it will be easier for children to value money and learn to use it wisely.

5. Assign an allowance or weekly allowance

Around the age of five or six, depending on the maturity of the children, you can allocate a weekly allowance to your children, according to ASFAC – Association of Specialized Credit Institutions. This is when you should start encouraging them to set small goals and save money to achieve them. Later, around the age of 10 or 11, you can switch to pocket money. Encourage them to create a budget to manage their allowance, define where they will spend the money (leisure or clothing, for example) and set aside a portion to save.

6. Involve them in the family budget

It is important that your children participate in some of the family's financial decisions, related to the family budget. For example, if you decide to take a trip to Europe, you can get the family together to create a vacation budget. By analyzing the family budget together, they can more easily discover where they can save. It's a way of teaching them that travel is not free and that, sometimes, you have to make sacrifices to achieve your goals.

7. Make an emergency fund

An emergency fund is a way of protecting the family's stability, in case an unforeseen event occurs that prevents parents from earning income for a certain period of time. Such as, for example, prolonged unemployment or an accident that forces them to stop working for some time. The emergency fund must have at least the equivalent of six months of fixed expenses. It must also be applied to a product that can be mobilized at any time. This way, at a time of greater financial difficulty, it will not be necessary to allocate money from savings for daily management.

8. Protect your children's future

Anyone who has children has at some point thought about what will happen to the family if one of the parents dies or becomes disabled. One way to ensure that your descendants' lifestyle is not compromised by a family loss is to take out life insurance that safeguards the children's future in the event of a serious illness, disability or death of one of the parents.