School in September is going to look very different for our kids and grandkids than it did in this pre-pandemic picture.  My wife’s return to school as a primary teacher has me thinking about all the different ways we can nurture our young ones through our finances.
Image credit:  woodleywonderworks

The last few weeks of summer are always a topsy-turvy time in our household. I’m married to a kindergarten teacher, and our three boys will be starting classes again. For the first time, they’ll be at three different schools. Our oldest is at Catholic Central High School in the International Baccalaureate program, while our middle son is super pumped to have been accepted into the world-class Beal Art program, and our youngest is beginning Grade 5. Add in the usual uncertainties of 2020, and it’s  definitely going to be a hectic fall! My favourite commentary; however, is by someone who posted “only four weeks left of March Break” on my wife Bridget’s Facebook feed as August rolled around.

Bridget’s kindergarten classroom is facing some radical changes for September. The unbelievable part is that she isn’t actually sure what those changes will be, as the public health situation is changing constantly. It’s going to be a tricky year for her, personally and professionally as she does her annual job of teaching young 3-, 4- and 5-year-olds how to learn for the first time. It takes a very special person to do that job and she is exceptional at it.

Kindergartens have a fascinating history. The name is German – and literally means “garden of children”. In a German village, in 1837, the concept was born as a social experiment driven by Fredrich Fröbel.  He believed that learning through play could be used to help transition young children into their school years. In essence, Fröbel believed that children’s learning required nurturing and care in the same way that one might nurture and care for plants in the garden – hence the name kindergarten.

Nurturing more than young minds

I was very fortunate to have been born to parents who were interested in nurturing both my mind and my financial future. I’ve worked hard with my kids to pass those lessons along. I’ve written of this before, in My Son & Superman, but there are many other things we are doing for our kids (and even eventual grandkids) welfare.

RESPs

Like most parents, we have a registered education savings plan (RESP) set up for our kids. You might have the same, or, perhaps you have one for your grandkids or a favourite niece or nephew. Did you know that it is essential that your will has a clause discussing these accounts? Many people don’t realize that. If you were to pass away, the RESP could end up as part of your estate, and be cashed out, forcing the return of government grants.  It is absolutely crucial to make sure you double check your will and see if you have a successor holder named on the accounts.

Insurance

I’m a strong believer in making sure kids are well insured early on. We hold a life insurance policy on each of our kids  with the idea that it will allow us to pass wealth down one or two generations with little to no tax consequences. Money that is inside a life insurance policy can grow tax free, so long as it is not withdrawn during the lifetime of the insured. However, as a parent or grandparent, you can own a policy on your child (or grandchild) and transfer it to them once they are old enough  without triggering tax. In Ontario, you can transfer a policy to the child once they’re 16. This would allow the child to withdraw funds at their (presumably) lower tax rate. Sometimes we refer to this as a “cascade” strategy. Even if the receiving child doesn’t touch the funds, the insurance will eventually potentially pay out tax free to their children. It’s a great way to preserve family wealth across generations by minimizing taxation.

Additionally, each of my kids has a critical illness policy. These policies will pay out if they are diagnosed with one of about 20 or so conditions, the most prevalent and concerning being cancer, heart attack or stroke, which collectively account for 85% of all claims.  The odds of this happening to them as children are small, but for Bridget and me, it was important to ensure that we would be in a financially OK place if something did happen. More importantly, these policies will provide coverage to the boys for most of their life and will eventually return the premiums paid into the policy if they never claim.  Because we set them up at birth, their own medical history was super clean. It’s a lot harder (and more expensive!) to get this coverage as an adult.

Giving them a good role-model

We’ve spent our life as chronic savers, living within our means, and parking our money away for a rainy day. This is probably the most important thing we have done to help nurture our children’s financial future. I’m very proud to say that our kids are remarkably good savers. A few days ago, our middle son went to deposit more funds into his bank account – which is now rapidly approaching $600 once again after he depleted it last year to purchase specialized art gear to help prepare him for his acceptance to Beal Art. Our boys are chronic savers, and thoughtful spenders, and most importantly, they value community, connection and friendships over money and spending. It’s a pretty awesome place to be as a parent.

How are you nurturing the garden in your family?

This fall take a moment to think about how you are nurturing the little minds in your family or close circles. Whether it’s your children, grandchildren, or a favourite young person in your life, you can make a significant impact through action, demonstration, or helping them along with their future.

Have a safe and happy fall,
Ryan

PS – In true 2020 style, Bridget has just found out she is teaching Grade 2, instead of Kindergarten.  It is definitely a “roll with it” kind of year!