Securing our children’s future financially can be overwhelming for any parent. Not only are we concerned about funding our children’s education fees, some of us also wish to support them in their first car or home purchase.
But one thing is for certain: the future is not within our control. Nevertheless, we can focus on what we can control and work on it so that our children can enjoy healthier and better lives.
In this episode of our Money-Smart Mama series, we are here with Helwa Sofni, a licensed financial planner and a mother of three. We are going to walk you through how you as a parent can help secure your children’s future financially.
How to Financially Protect Your Children’s Future
Q1: What can parents do to be financially prepared in securing their children’s future?
We can start with a proper assessment of your finances. Through this, you will be able to have a holistic overview of your financial status. You can ascertain how efficient are your cash inflows and outflows, as well as your risk management, on top of your financial needs.
Speaking of risk management, it is always about preparing for life’s uncertainties. Whether it is due to inflation, retrenchment, pay cut, market depreciation due to wars or conflicts, or even a critical illness, these can bring about added stress for any family.
This is why we need to have proper financial planning; so that such uncertainties do not affect our plans for our children.
Q2: How can parents prepare a simple financial plan?
Parents can start off by setting clear financial goals or objectives. For instance, you may be thinking of setting up an education fund to pay for your children’s university fees.
Once you have set a clear goal, you can then start to manage your cash flow. Apart from spending wisely and fulfilling your monthly commitments, you should also allocate a certain amount for saving and investing so that you can hedge your wealth against inflation.
Last but not least, you should consider having a protection plan to protect your wealth so that your finances are not affected should life’s uncertainties affect you and your family.
Q3: How long should parents save to safeguard their children’s future?
While there is no one answer as to how long a parent should save, the rule of thumb is to:
Equip yourself with sufficient financial knowledge and start saving as early as possible.
You will then have a longer timeframe to grow your savings while enjoying the benefits of compounding interest.
You should also review your financial plan regularly so that you can cater to any growing needs or sudden changes to your family life. Both you and your spouse should do this each time you reach a new milestone. This can include welcoming a newborn baby, purchasing a new house or even securing a new job.
Q4: What is the best amount to securing our children’s future financially?
The only way to find out how much you need to secure your children’s future is to be clear about your expectations. For example, the funds needed for your children to attend a local university as compared to an overseas university will differ vastly.
Upon deciding on what your goal is, you can then proceed to estimate the funds required to pay for your children’s university fees. With this, you will be able to determine how much and how long you need to start saving and investing to reach your financial goal.
Another option to consider is to do scenario planning. Set aside a minimum and maximum amount for spending, saving and investing each month. Not only will you be clear on your own expectations, you will also know what you need to work on to reach your financial goal.
You can then take the necessary actions and work towards your future life scenarios accordingly.
Q5: How can I prepare my children financially if something happens to me?
Though this might be a topic that parents prefer not to talk about, we need to be prepared as early as possible. It is important to have a protection plan in place to safeguard your children’s future against any of life’s uncertainties.
You need to look for a trustworthy person who can carry out your wishes if you are no longer around. It is equally important to let your loved ones know about your protection plan and where the relevant documents are kept. These documents should be stored properly and made accessible to your trusted person and/or beneficiaries.
Secure Your Children’s Future with AIA Malaysia
Just like the COVID-19 pandemic, we can never foresee when and how an untoward event can affect our lives. Although we are not able to have full control of the circumstances in our lives, we can still plan ahead —both for ourselves and our children.
When we plan early, we have a longer timeframe to save up to support our children’s dreams and future!
Secure your children’s future with AIA’s new savings and protection plan, A-Life Wealth Treasure. You can start preparing for your children’s financial needs from as early as 14-days-old.
Being an investment-linked insurance plan, A-Life Wealth Treasure provides high protection for your children, starting at a minimum coverage amount of RM200,000. Here’s an extra perk for those of you who start saving early for your children while they are still young: You can be rewarded with up to an additional 12% of your children’s coverage amount.
You can also unlock additional benefits for your children when you sign up for A-Life Wealth Treasure, attach the A-Plus ParentCare plan rider and become an active AIA Vitality member. By making healthy choices for your life, you can unlock cash rewards of up to 0.5% of the rider’s coverage amount, which will be credited into your child’s policy wealth account every year.
Head over to AIA’s official website for more information on AIA’s comprehensive Total Health and Wealth Solutions for you and your child.
If you wish to know more on family financial management and money-saving tips from our group of experts, stay tuned to our next episode of Money-Smart Mama!
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