How to Set Up Your Kids Financially

How to Set Up Your Kids Financially: Real-Life Steps We're Taking for Our Daughter Maddie

When it comes to our kids, most of us would do just about anything to make sure they’re safe, secure, and set up for a successful future. As a mom and real estate professional, I’ve made it a personal mission to not only create financial stability for our daughter Maddie today, but to build a long-term foundation that will serve her for decades to come. Whether you're just starting a family or looking to put better systems in place for your children, here are some of the practical steps Frank and I have taken that might help you do the same.

1. Life Insurance: A Head Start with Whole Life Coverage

We started with life insurance. Maddie has a whole life insurance policy through State Farm, managed by State Farm Agent Tom Hindman. A whole life policy is a form of permanent life insurance that provides both a death benefit and a built-in savings component. One of the major advantages is we only have to pay premiums until she turns 16. After that, the policy is fully paid off, yet it continues to grow in value over time. Unlike term life insurance, whole life policies never expire, meaning Maddie’s future family will receive the benefit no matter when she passes. Each year, we also choose to reinvest the interest earned on the policy. This interest essentially builds a separate savings component she can access in early adulthood. Based on current projections from State Farm, Maddie will have about $24,000 available by the time she turns 21, and that number will continue to grow annually. Whether she decides to use it for college, a down payment on a home, or launching a business, it’s a powerful financial cushion to give her flexibility and support. If you’d like more information or want to explore options for your own child, Tom Hindman at State Farm is an excellent resource and can be reached at (310) 602-9697.

2. Coverage for Us: Term and Return of Premium Life Insurance

My husband Frank and I also have life insurance through Tom Hindman. We chose a combination of term life policies and return of premium policies, both of which provide coverage for a set period - 30 years in our case. If something were to happen to either of us during that time, the policies would pay out a death benefit to help support our family financially.

What makes the return of premium policies especially appealing is that if we’re fortunate enough to outlive the 30-year term, we receive all of our premium payments back! It’s a major win offering the peace of mind that comes with life insurance, while also functioning as a built-in savings plan if the coverage goes unused. Again, Tom is our go-to and someone we really trust with these important decisions.

3. Investing Commission Income: Maddie’s Brokerage Account

Every time I close a real estate transaction, I set aside a small portion of my commission for Maddie. Originally, I placed it in a traditional savings account, but I recently made the switch to a brokerage account at Chase, which allows us to invest the money more aggressively. Since Maddie is only four years old, we have time on our side to ride out market fluctuations and aim for higher returns. This account has already started to grow nicely, and I couldn’t be more pleased with the service we've received from the Chase team in San Pedro - specifically Ivan Arzate and Ifeoma Nwuke-Black. They’ve been incredibly helpful and proactive in guiding us through the process.

4. Building Credit Early: Adding Maddie to Our Credit Cards

One of my favorite financial hacks is building credit for your child before they even know what credit is. When Maddie was just a few months old, I added her as an authorized user on most of our credit cards. As long as you’re making on-time payments and managing your credit responsibly, this can significantly boost your child’s credit score by the time they reach adulthood. The only exception was American Express, which requires authorized users to be at least 11 years old. But for all the other cards, it was a simple and effective move to give Maddie a strong financial head start, and it literally took less than 5 minutes per card to add her through our online banking portals.

5. Creating a Trust: Protecting Your Family’s Future

Finally, one of the most important pieces of the puzzle is setting up a family trust. This ensures that if something happens to Frank or I, our assets, and more importantly, Maddie, will be taken care of without going through the probate process. It also outlines who would take care of her, manages medical and financial decisions, and ensures our real estate and other assets are passed down properly. We work with Kim Dannettell at Praedium Trust Services, who made the entire process incredibly easy. She offers both in-home and Zoom appointments and can be reached at (949) 575-9515. We’ve also made sure to place all of our properties into our trust, which is crucial for avoiding legal probate complications down the road.

Closing Thoughts: Start Early, Be Consistent, and Think Long-Term

Setting up your kids financially doesn’t happen overnight, but small, consistent steps can have a massive impact over time. From life insurance and investments to credit building and estate planning, there are so many smart moves you can make - many of which don’t require huge upfront costs. These are the real, practical strategies we’re using to create a strong financial foundation for Maddie. If you ever want to talk more about any of these topics, especially if you’re a fellow parent juggling work and family life, I’m always happy to share what’s worked for us. Let’s set our kids up not just for success, but for security, freedom, and opportunity.