Financial Freedom: Being Debt Free for your Kids
How does one achieve Financial Freedom? And how can you be debt free for your kids? The average American has some type of debt or credit card bills. They also have mortgage costs, and some may have taken up home equity loans. Additionally, most people could take up personal loans to start different projects, pay for the renovations and buy different items for their convenience. This could include a car or payments for a holiday or long-needed vacation. Sadly, however, we could end up passing this debt on to our children, forcing them to pay through their noses. We all want the best for our children, and that includes financial freedom. Our debts shouldn’t limit our kids’ visions for the future. That said, here are a few tips on how you can offer your children the best protection against unexpected fees, loans or other forms of credit.
Be honest with your children about the debt
Most of the time, our kids are usually unaware of our financial status. As such, they end up finding out the family or their parents were in deep debt only after they have passed on. The debt could eat into any assets you had planned to leave your children. This could result in their financial instability. The solution? Be completely honest with your kids about your financial position. Regularly update them on changes to the assets you own and liabilities you have. Give them information on the number of accounts you have and your overall view of the future.
That way, they will be mentally prepared in case you unexpectedly pass on. In case you have debt, they can make the necessary steps to pay it immediately. In case they cannot afford to pay the debt immediately, they will always benefit from a heads-up earlier on since they will have lower stress levels. In some rather unfortunate situations, parents had offshore accounts that could have offset their debt when they died. However, these came to be discovered much later when the children had already sold what they had and in some cases dropped out of school. Don’t let this be your story. Instead, let your children have financial stability.
Buy sufficient life insurance
For most people, the main reason to get life insurance is usually to protect their income. However, did you know that this service can help your kids pay off any debt that you leave behind? This applies in particular for credit incurred on objects you owned that your children inherited. A car, for example, could have your kids pay off an auto loan. In the same spirit, inheriting a house could come with mortgage payments.
Fortunately, any money you leave behind through life insurance cannot be accessed by your creditors. Your children could use these funds to pay off your debts or invest it and achieve financial stability after getting your loan.
Start paying off your debts
The best way you can ensure your children have little to no credit on their hands now is by paying it off. During your life, ensure you track your debt and make a plan for its payment. As you cut down your credit level, avoid making major purchases. Instead, focus on the necessities and create a priority list of goods and wants. These will help you secure the financial freedom of your children.
Adopt these tips into your lifestyle today to protect your kids and help them on their road towards financial freedom.