Aside from opening a savings account for the baby, there are other creative ways to financially invest in his future.
One thing you can pass on to your child is property that allows her to earn passive income when she becomes an adult. Start by locating a decent and affordable rental property and then take in responsible tenants who will pay you rent on time. You can use the rent money to pay the mortgage on that house and when your child becomes a legal adult, you can transfer ownership of the rental property to him. Your child can become a landlord himself and earn a steady income.
You can also set up a family trust for your child’s college expenses and post-graduation living expenses while the adult child looks for his first job. You will need to appoint a trustee over the trust who is responsible for executing terms of the trust should you become deceased. You can include assets such as money, cars, property and family heirlooms to the trust.
Helping your teen manage a checking account
Another idea is to transfer your stocks to your children. Keep in mind that depending the amount you transfer to your children when they become adults, they might need to pay gift taxes when they decide to sell the stocks. The drawback to this is if you are transferring the stocks for the child’s financial aid, it could hurt rather than help. This is because lenders frown upon applicants who already have some funds of their own.
A debt-free life is one of the best ways to invest in your baby’s future because if you are not saddled with unpaid debt, it becomes easier to save funds for the child. Look over your credit report and score, and pay down as much debt as possible within income limits. Don’t apply for new credit cards and spend less than you earn.
Get your teenage kids to assist in saving for their young sibling’s financial well being. If your teens have jobs, have them give part of what they earn to the savings account you set up for the baby. This teaches your older children generosity and it helps in cases where you are not able to contribute for a period of time due to a job loss.
Your baby deserves preparation for a bright financial future and with the above mentioned methods, your child will enter adulthood with the funds needed to start a new stage in life. This gift is better than the latest gadgets or baby toys.
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