How to start your kid’s savings today
We all want the best for our little ones in life. And that never goes away, no matter if you are a new parent or with a child in college, the urge to nurture and provide will always be strong. The need to make a cash advance in our child’s life is a natural and encourageable thing to do.
But one of the best things we can teach our children is how to handle their finances. Whether its the start of their piggy bank and learning not to blow all of their Christmas money on frivolities, or how to save up for their first car, money skills are ones we must all eventually learn.
Most parents open a savings account for their children from birth, to cash all of those lovely christening cheques that their baby will undoubtedly receive. And this is a good start. By providing the tools and kick starting your kid’s savings, you can end up handing them a large sum of money when they reach eighteen, which will undoubtedly help them out as they start their journey to adulthood.
Advice for Parents
Opening a savings account as soon as possible is one of the best ways of saving for your child’s future. Whilst it’s tempting to fill the piggy bank, let’s face it – you’ll earn no interest that way. But by selecting a high-interest savings bond or ISA account and putting money straight in, you will be earning your child an extra, even if mini, income on top of what they have.
And don’t be fooled into thinking that you have to cash in a large sum. Even £20 will start to yield its reward over time – and you can always add more as you go.
But don’t just rely on birthday cards and Christmas cheques to line your little one’s pockets. If you are able to and can afford it, it’s highly recommended to put a little bit aside each month into your child’s savings and make sure that money stays there! Interest is often paid monthly or annually, so the longer you (or your child) waits to make a withdrawal, the more extra money they get!
Is money tight after the expense of having a baby? Worried for your child’s future as you can’t afford to heed the advice above? Do not panic. There are always ways and means.
To get your child’s saving funds off to a good (quick!) start, you might consider a small cash advance. Either by taking out a small loan or simply using your credit card for the food shopping for a month so that you can free up some spare cash to invest in your child’s future. A cash advance could be the advantage on your way to topping up baby’s ISA account.
Tips for Kids
Encourage your children to have good financial habits without cutting them off from their pocket money completely. Instead, follow the advice of Jim Rohn – for every £1 they receive, allow them 70p to spend and save the rest. This way they never feel deprived yet learn the necessity of good monetary behavior.
Encourage this for all areas of their finances, including gifts, pocket money, and as they get older, Saturday jobs and chores. In fact, by making pocket money only accessible in reward of doing chores, your child will be more likely to respect the earning process, and thus more inclined to respect their savings rather than take money for granted.
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If you are considering a loan please make sure you can afford to repay it back in time. Late repayments can cause you serious money problems. For help please go to moneyadviceservice.org.uk