When you have kids you start to ask yourself questions about how to best prepare them for the future. Should you save for them? Should they save for themselves? If you do save for them, how much should they have to start off with? None of these questions are easily answered because in the end they have to do with your values as a parent. If you truly want to help your kids out in life make sure you don’t just save for their college education, but for your retirement so that you are more self-sufficient later on in life.
Approaches to Saving
There are a lot of different approaches you can take in trying to save up enough money. You can invest in government bonds that will be a lot more valuable when they are ready for college. You can invest in a savings account where it will accrue interest over time. There are also stocks and mutual funds. Whatever way you choose to invest for your child’s future, and your retirement, you will need a budget before you start. When you go to make your budget write down all your expenses and tally up your monthly expenditures. Now figure out how much you have left over on a monthly basis. If you don’t already have an emergency fund it is a good idea to get this handled and saved up before you move on to saving for bigger goals. If you don’t do this first, if anything happens you will be tempted to dip into what you have saved for yourself and your children.
Once you have your monthly budget totaled up you can add a line for kids and a line for your retirement. Now just add the amount that you are going to put to work in these categories monthly. You have a lot of options when it comes to investing this money that you are setting back. One good tip is to diversify your options. Don’t just invest in stocks, invest in stocks and bonds and make sure to also just add cash straight into the savings account.
Depending on how early you decided to start saving for your child’s education will determine how much they are going to have. If you started later don’t worry because there are still plenty of ways you can help them succeed in life. You can help them apply for a student loan and become the co-signer of this student loan. If you plan on being a co-signer for them later on then make sure you have kept up with your own credit history so that this will be a lot easier when you go to apply.
Preparing your Children Early on
Start talking to your kids early on. A good age to start talking to your children about money is around age 12. Be very clear about how the world works and make sure to give them examples. Let them ask a lot of questions so that they can get a greater understanding of how things work. If you personally don’t know the answer to something then you have an opportunity to learn something together which will also help enhance their much needed research skills. There are plenty of exercises you can do with them to show them how to balance their monthly finances. You can teach them how to save back a little each time they get some money. You can teach them how to spend their money the best ways and most importantly you can communicate with them about their future and how they would like their life to go. If your child doesn’t want to go to college you can also just save up for them to have an initial nest egg that they get to start off with. They could start their own business, travel and find their true passions, or there are even mentor programs they could get enlisted in.
If you have trouble following your budget then there are some tools and techniques you can use to help you succeed at saving. You can use financial software to set up your savings as monthly payments and they will alert you when these are due so that you can make sure you keep investing. You can also print out or buy a calendar to make into a financial calendar where you keep track of your payments and due dates. These tips will help you follow through each month with your financial goals so that you and your kids have the future you planned for.