Ladies are in the habit of confirming and reconfirming that they are pregnant. So, when your wife gives you an envelope or a pregnancy confirmation note, be happy and clink glasses. Afterwards, you should start planning the future of your unborn child.
You will agree with me that humans, naturally, are in the habit of waiting until the need arises before they react; you don’t want to be one of such. If on your twentieth birthday, your father had given you a gift and it was a bank account revealing that you are a millionaire; you would have been better off. Imagine doing that for your child. I am not saying you should dump a million in each of your child’s account on his or her twentieth birthday. Except you are a Dangote, Zuckerberg or one of those millionaires and billionaires, you won’t be able to do that. So you probably need a financial plan on how to protect the future of your child. You should be thinking of how to make him (or her) a millionaire before his (or her) twentieth birthday. Here is what you should do:
Step One-Apply the deduction strategy
Open a savings account for your unborn child in a local bank. I’m very sure your banker will be glad to help you with a flexible arrangement as long as you will be depositing your money with the bank. Then have an arrangement with your banker that at least 5-10% (or more if you have the gut) should be deducted from your monthly pay-check or income and automatically deposited in your unborn child’s account. If for example, you are earning 100, 000 every month, 5% of your earning will be 5, 000. Parting with 5, 000 every month, for a worthy cause, will not break your back. After all, it is nothing compared to the amount some guys part with in a drinking competition with friends in clubs on Fridays. You can apply the deduction strategy on any size of pay-check or income as long as you are willing. So why not choose a worthy cause that will probably relieve you in the future and make you a proud parent.
Step Two-Find an investment portfolio
Based on my example, 5,000 deducted from 100, 000 monthly in 12 months equals 60,000. By now, your child should be approximately 4 months old if you started from the first month you got the news that you are going to be a father. This is perhaps the best time to find a secured investment that can help you grow your child’s money. Also, you don’t want to be tagged foolish for abandoning money in a savings account; let the money starts working for your child. I believe if you ask your banker, there are some juicy packages he or she can offer you on how to secure and grow the money. There is child’s education fund, a replica of trust fund that can protect your child’s future. Also, these days, there are insurance policies for children. You may want to consider such. There are also some financial houses offering stock broking account for children. Fixed deposit is also not a bad idea as well as T-Bill. Whatever you do, make sure you turn your child’s money into a financial vehicle that can at least bring back some percentage on investment at the end of every year for the next twenty years.
Step Three-Repeat the Strategy
There is every tendency that you will want to stop the automatic deduction of 5% from your income once you turn the first year savings into a growing investment. But remember the whole idea is for you to continue in this habit or strategy, every year, for the next 20 years. If you steadily maintain an income of 100, 000, deducting 5% every month from it, in the next 20 years, you would have put aside 1.2 million if you foolishly do not invest it. However, if you steadily grow your career, increase your income, keep deducting 5% and investing it wisely on behalf of your child, you will probably make your child a multimillionaire on his or her twentieth birthday. Trust me, the compound interest on the regularly invested money will make your dream come true.
Step Four-Add to the list: now you don’t want only your first child to enjoy the privilege of being wealthy before his or her twentieth birthday. And I believe, like our fathers, you don’t want to give birth to ten children in this harsh economy. But with a maximum number of two to four children, you can give them the privilege of becoming financial free in the future. On four children, 20% deducted from your monthly income won’t make you poorer rather it will make you richer in the future. Follow this strategy diligent and you will be tagged the father of millionaires who the children will be proud of.