In a fast-changing world, it is important to secure your child’s future.
Old Mutual Personal Finance Certified Financial Planner® Sean van Zyl says rapid advances in artificial intelligence and shifts in global power relations, among others, mean that the world is changing rapidly.
“In these uncertain times, parents must ensure they make the right decisions and invest in financial solutions to provide their children with a secure future,” says van Zyl. A new trend in education is to consider international opportunities. “Many parents are looking for international opportunities for their children and sending them to universities overseas to be more competitive in the job market.”
Technological innovation means parents must help their children develop multiple skills to keep pace.
Choosing the right mix of financial solutions
There are many education plans and policies available on the market. So, seek professional advice from trusted financial advisers when planning for your children’s future needs.
Van Zyl says that there should be a holistic approach to financial planning. This means opting for a suitable and practical education funding strategy. This will also include risk planning to ensure your child’s educational needs are still met if you or your partner becomes ill, disabled, or passes away.
“Adding a versatile savings vehicle to a family’s financial planning portfolio can provide flexibility for a child’s unforeseen career choices and opportunities.” He says this way, these savings can easily be accessed to buy a car, start a business, or invest in the stock market, among others. Parents must engage with their financial adviser to budget, prioritise their needs, and factor in all possible scenarios and potential future obstacles. This will ensure the financial plan is achievable, affordable, and flexible.
Financial education is the game-changer
“We also need to check our policies at least once a year and make sure there aren’t any limitations in terms of getting access to the money when it is needed or incurring penalties for needing to access it sooner,” says van Zyl.
“Keeping track of your savings and investments’ will assure you that you are saving enough for your children’s future. It will also give you peace of mind knowing there is enough money to allow them to reach their full potential. Make sure the contributions and annual escalations are adequate.”
Read more about teaching the value of money
Never too young
Van Zyl says it is also essential that parents teach their children about money from an early age.
“Some people believe that age three is the right time to teach children about delayed gratification. They need to learn from a young age to make decisions about financial matters to secure their future financial wellness.
Instead of allowing them to go into a shop and choose whatever they want, say: ‘You’ve got R50 to spend. These are the three things that cost R50. Which one would you like?
“They must learn to understand what money is about. Because the last thing you want is to make your child believe that you’re an ATM,” he concludes.