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Last week, on June 1st, 2022, my daughter Noah Elizabeth was born.
I am thrilled to be a father of three and have enjoyed the last week getting snuggles in and watching my other children love their new sister.
In my downtime this last week I also got to thinking about some pretty common mistakes parents make, financially, when they have kids.
2 Common Financial Mistakes People Make When They Have Kids.
If you're like me, you want to set money aside for your kids. After all, it's not getting cheaper to live in this world. Our wages are not increasing as fast as inflation, and if it continues, it will be significantly harder for our kids to thrive than it is for us.
This desire, however, usually causes parents to make 2 financial mistakes as they begin to save for their kids. So, if have kids in the house, avoid these 2 common financial mistakes:
1) Not Saving Enough For Yourself
Too often, people will come into my office ready to set money aside for their kids in an RESP or another saving tool, but they aren't even close to saving enough for themselves to be financially independent come 'retirement.'
I don't know about you but I would much rather my children sleep at my house when they are in university or starting up a small business than me having to sleep at their house when I'm in 'retirement' because I did not save well enough.
Make sure that you are putting enough away for yourself so that you can sustain your lifestyle when you longer can, or want to, work before you start saving for your kids.
Also, it's easier to provide for your children from a place of abundance than it is from a place of scarcity. If you save enough for yourself and invest it appropriately, you'll be in a greater position to help your children from your abundance down the road, which will be more helpful in the long run.
Make sure you are saving enough for yourself first, and then start saving for your children. Talk to an advisor to see how much you need to be financially secure when you retire.
2) You Start By Contributing to an RESP.
The RESP is, in and of itself, not the problem. It can be a great tool to use when saving for your children's education. It is just prioritized too high, and over things that will be more beneficial for your children, like Child Whole Life Insurance.
There are several reasons why you would benefit from choosing to contribute to a whole life insurance policy for your children over the RESP (I talked about it in my last post which you can read here). Whole life insurance is the most underrated and the most versatile financial tool available in Canada. The long-term benefits of Whole Life Insurance far outweigh the benefits your child will receive from an RESP. Plus, since it's a permanent life insurance product, your grandchildren could easily be the beneficiary of such a policy, which means you will have started the process of building generational family wealth.
If you'd like to learn more about saving for yourself or helping your children succeed, please email me at firstname.lastname@example.org