3 Money Moves I Made ASAP to Give My Kids a Leg Up in Life

Most parents want to give their kids the best life they can. There are many factors that play into this, but money is obviously a big one. The financial decisions we make today affect our kids both in the present and well into the future.

When I became a parent, I took the following three moves within a few months of my kids' births. They didn't take long and they help me sleep better at night, knowing I've done what I can to set my kids up for a bright future.

1. I made them authorized users on my primary credit card

I admit, I got to this one a little late with my son. But when my daughter came along, I was quick to add both my kids to my primary credit card as authorized users. This essentially gives them the same rights to use the card as I have, although I'm still responsible for the bill.

They each got their own card in the mail, but I've hidden those away and I don't intend to give them to the kids even when they're old enough to know what credit cards are. My goal wasn't to give them their own credit cards; it was to get my account on their credit histories to help them build their creditworthiness.

I'm good about paying my credit card bill on time every month and not charging too much to the card, so this will reflect well on my kids' credit histories. When they're old enough to apply for loans or credit cards themselves, they should have an easier time of it because their reports will already show them as having well over a decade of experience making regular payments on a credit card.

It might seem a bit like cheating to some, but it's one of the easiest ways to give your kids a jumpstart on a strong credit history. If you're interested in doing the same for your kids, check with your issuer to see what its rules are for authorized users. Some require authorized users to be of a certain age, while others have no age restrictions. Many issuers enable you to add authorized users online, but you can also contact the card issuer by phone. Usually, all you need is their name and birth date and possibly their Social Security number.

2. I opened college savings accounts for them

My kids each have a 529 college savings account where I set aside money each month for their higher education costs. My kids are too young to have any sort of career goals right now, so I have no idea whether they'll want to attend a traditional university or go to a trade school. But they can use 529 funds for either.

I can also transfer 529 accounts to a new beneficiary, so if one of my kids needs more money for their school and the other needs less, I can make that adjustment as needed. But there are usually rules about how long you have to change the beneficiary after opening the account.

You don't need a 529 account to save for higher education, but it's possible to receive state tax breaks if you open a 529 through your state's plan. These plans also have tax-deferred growth, and qualifying education withdrawals are tax-free. But you could pay a penalty if you attempt to withdraw the funds for non-educational expenses.

If you're worried about having leftover funds in the account, you'll be happy to know that a new rule change that went into effect this year enables 529 beneficiaries to transfer up to a lifetime maximum of $35,000 from a 529 plan to a Roth IRA in their name. But to do this, the beneficiary and plan must meet the following requirements:

• The Roth IRA must be in the name of the 529 plan beneficiary.
• The 529 plan must have been open for at least 15 years prior to the transfer.
• You cannot transfer funds deposited within the five years prior to the transfer or any earnings associated with these funds.
• You can only contribute up to the lesser of your earned income or the IRA contribution limit each year ($7,000 in 2024), and these rollovers reduce how much you can contribute to an IRA directly.

Doing this could help your kids get a headstart on retirement savings if they don't need all that you've saved for schooling.

3. I increased my life insurance

Though I don't like to think about missing out on my kids growing up, I know there's always a risk of that happening. That's why I made room in my budget for additional life insurance after each of my children were born.

I had already had a policy prior to having children, but if you don't, now's a great time to compare life insurance providers. You can reach out and get quotes from a few to see which offers the best deal. They'll take your age, health status, and desired coverage into account when setting your premium. If you're not sure how much life insurance you need, think about what sort of expenses you'd like to cover for your family should you pass away.

You will likely need to submit to a medical exam in order for your policy to get approved, and this can take some time. So it's best not to delay too long if you want your policy to go into effect soon.

I understand that not everyone can afford to take all the steps that I've mentioned here, and that's OK. Even doing one of the above things could make a big difference to your child's financial well-being down the road. All we can ever do is our best.