How can parents prepare financially for their children? 

There is no comparing the joy you have when you finally have a child. Of course, you want the best for them. But you soon realize you have to provide for their early education, healthcare, college tuition, and, for sure, vacations and other passions and interests.

Here’s how to build a solid financial foundation for your children’s future.

1. Prioritize your financial well-being

Before planning for your child’s future, secure your own finances first:

• Emergency Fund: Save at least 3-6 months’ worth of living expenses to handle unexpected costs.
• Debt Management: Reduce loans before having children to ease financial pressure.
• Retirement Planning: Invest in retirement accounts to avoid relying on children later in life.

If possible, explore side hustles that can provide additional financial security and accelerate savings.

2. Create a smart budget

A well-planned budget ensures financial stability. Use the 50/30/20 Rule:

• 50% for necessities (housing, food, healthcare)
• 30% for savings and investments
• 20% for discretionary spending (entertainment, travel)

This is just a sample budget allocation. You may adjust the percentages depending on your situation and needs.

3. Plan for each stage of your child’s life

Financial needs change as children grow. Consider these costs:

• Early Childhood (0-5 years): Budget for medical care, daycare, and early learning.
• School Age (6-12 years): Save for tuition, extracurricular activities, and education accounts.
• Teen Years (13-18 years): Prepare for tutoring, gadgets, and college planning.
• Young Adulthood (18+ years): Increase college fund contributions and assist with personal expenses like transportation and healthcare.

Develop a simple plan for each stage and stick to it or adjust as needed. Having a plan is better than having no plan at all.

4. Invest for long-term growth

Beyond savings, consider these investment options:

• Unit Investment Trust Funds (UITFs): Flexible, professionally managed funds that grow wealth over time.
• Investment Management Accounts (IMAs): Higher-yielding investments for long-term goals.
• Custodial Accounts or Trust Funds: Secure assets for your child’s future while maintaining distribution control.

With UITFs, for example, you have the flexibility to start investing in small amounts, and the freedom to choose funds that fit your risk tolerance, time horizon, and financial goals. Automating a 5-10% monthly income transfer to a child’s investment account is a disciplined way to build wealth.

For larger amounts, you can also look into the benefits of an Investment Management Account (IMA-UITFs) with discretionary mandates. This affords a hands-free approach to long-term growth investing, expertly managed by seasoned investment professionals with a choice of a tailored investment strategy that matches your investment risk profile and objectives.

Just consult a financial advisor to better understand your options for you and your children.

5. Teach financial literacy early

Help children develop healthy money habits:

• Teach budgeting and responsible spending.
• Encourage saving for short- and long-term goals.
• Introduce them to investing basics.
• Explain credit and debt management.

Educate yourself too, so you can teach these concepts to your children. They learn better when they see that you have good financial habits as well.

6. Plan for healthcare costs

Start with a healthy lifestyle by eating well and having an exercise regimen. Then do these:

• Choose a health insurance plan that balances premiums, deductibles, and coverage.
• Utilize employer-provided benefits and free preventive care.
• Stick to a healthy lifestyle to reduce medical expenses.

You may not totally avoid health problems, but these tips will help minimize the financial impact.

7. Encourage financial independence

There are other skills that lead to financial independence. Here are some other tips.

• Money is a by-product of solving problems and meeting needs.
• Encourage them to think creatively in problem-solving.
• Educate children to focus not on chasing money, but creating value as a path to generating wealth.
• Teach them about supply and demand, pricing and customer satisfaction.
• Encourage learning skills like communication, leadership and financial literacy.
• Lead by example. Demonstrate value creation and involve them in real-life decision making.

This is a simple guide you can follow. It may not be easy. But, with discipline, it is possible to prepare for your children’s financial future without much anxiety.

If you do this, I am sure your children will thank you for it. One day, that will bring you added joy and fulfillment.

(If you wish to know more about how to make financial planning work for you and your loved ones, please consult your relationship manager or trust account manager. Not yet a client? Please sign up here or go to any Metrobank branch.)

JENNY BAYLON is the Head of the Account Management Department at Metrobank Trust Banking Group, where she handles private wealth clients. Previously, she served as the Personal Trust Business Lead. Before joining Metrobank, she was a Senior Relationship Manager in wealth management for both local and offshore banks. In addition, she has extensive experience as a life insurance planner. She is also a certified trust professional and associate estate planner.