We all dislike calculations and planning. When it comes to money we want it a lot but we underestimate the importance of financial planning too much. That’s why we often end up spending unwisely despite the fact that we had good money in the first place. Financial planning is important for everyone but it is crucial for parents. Parents usually avoid planning for their futures financially, which affects not only them but also their children. Parents not only plan financially themselves but also don’t educate their children about finances.
Karla Dennis, the CEO of Karla Dennis and Associates, Inc., believes that the reason why parents do not engage in financial planning is because they themselves do not know about it. That’s why they make huge mistakes in this regard. Karla highlights the following two major mistakes that parents commit in this regard.
Postponing Financial Planning
The biggest mistakes parents commit, she says, is believing that they can postpone financial planning. When thinking about financial planning people notice only its monetary aspects but fail to notice time, which is its biggest component.
Not Taking Tax into Account
The second most common and serious mistake parents make is ignoring the tax consequences of financial planning. There are tax implications for all of our financial activities. Most of the time, Karla says, the reason why parents’ financial plans don’t work is because they don’t take the time to account for the tax implications associated with it.
Karla Dennis’ Tips for Long Term Financial Planning
When it comes to the future of your children, your financial planning should be for the long-term. There is no way you can ensure the long-term care of your children without planning financially for the long term. Here are three most important things Karla Dennis wants all parents to know:
- Start Financial Planning Now
If you want a bright future for your children, start your financial planning today and do it for the long term. Even if you think you don’t need to start financial planning now, you should start it. The earlier your start planning the better it is for you and your kids.
- Make a List of Your Future Needs
The first thing you need to do while starting financial planning is anticipate your future needs in as much detail as possible and list them. Making such a list will not only make financial planning easier for you but will also ensure quality long-term financial planning.
- Get Your Insurance Now
If you are interested in acquiring long-term care for your kids, start insurance now. Again, says Karla, even if you feel like you don’t need insurance now you should get it. It’s better to get your insurance while you are young and it’s inexpensive.
Karla Dennis’ Advice to Retiring Parents
Retiring parents are often extremely worried about their financial stability and that of their kids. When we are worried we make major mistakes. Here are two most important things Karla believes every retiring parent should realize.
- The best thing a retiring parent should do is realize the fact that their kids are not a long-term plan. As a parent you need to make sure your kids are able to support themselves on their own. They are not your financial responsibility forever so try not to make them dependent on yourself. This is good both for yourself and your kids.
- Do not use your retirement savings to fund your kids’ education. The first thing you have to ensure is your financial security. If you are financially secure then you can spend anything that is left on your kids.
- Make sure you have your medical covered. Diseases and health disasters come unannounced and you should be able to take care of yourself if you suffer from a health issue. As per my experience, says Karla, most unplanned casualties in retirement center around health.