Two Goals in Financial Planning
A financial plan provides peace of mind. It ensures your child has the financial support he needs, both now and in the future. These two goals will guide your planning.
Goal #1: Set aside money to support your child’s future expenses
The financial plan encourages you to set aside some savings to support your child’s future expenses, where possible. The specific amount may be guided by how much your child may require on a monthly basis. Remember that there is no right or wrong answer here — the needs of each child and the resources available to each family will differ.
Goal #2: Make sure that the money is safely given to your child
How will your Child receive the money after you are no longer around? Will he be able to manage the full sum independently, or should he receive monthly or yearly payouts instead?
You may consider having an organisation manage the money. If necessary, appoint someone to also make financial decisions for your child after you are no longer around. You can learn more about these options later when considering your strategy for achieving this goal.
How to Make a Financial Plan
You may want to start by noting down and organising your child’s existing financial records. In the event you are no longer around, this document would be helpful for your child’s future caregiver. This document will also be useful to you in your ongoing planning for your child’s future, giving you an accessible record of your financial documents.
After you have done so, make some assumptions about your child’s future situation, his housing, what kind of support services he would need, and if he could earn a salary from his work.
Next, work towards a clearer understanding of your current net worth before penning down your financial plan.
How your financial plan will look depends on the way you wish to address the two goals above. As you develop the plan, you should make reference to the two goals to ensure that they are sufficiently achieved through your plan.
