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Investing in Your Kids: It Starts At Birth

By Chase Rimmer / November 5, 2018

As soon as you have a child, you should be thinking about putting some money aside for them. The earlier you start, the more interest can accrue, so you’ll be getting more out of what you put in. You should have an average of $2000 per year set aside for your young one (during their entire childhood) in order to simply cover half the cost of an average four-year college course. Here are the benefits of starting a savings account as soon as your child is born.

Teaching Responsibility

You might think that simply handing your child a few thousand dollars makes them feel like they can get money for nothing. To overcome this, involve them in the savings process as early as possible. Explain to them why you have opened this savings account and help them to track the interest increases.

Children tend to learn by example, modelling their behavior on their parents. If you have failed to put money aside from them early enough on, they may also pick up these habits. They’ll also see a smaller return on investment and fail to see the point of investing early. Starting a savings account from birth will show them how to take responsibility for the future by making sacrifices now.

It Puts You at Ease

As your teenager grows up, you’ll begin to notice your role in their lives becoming diminished. This can be discomforting as you start to feel a loss of control over their decision making. This is perfectly normal and comes from a desire to do what’s best for them.

By investing in your kids as soon as they are born, you will find it easier to let them go when they reach adulthood. The money you have set aside for them means that they have something to fall back on if they don’t manage to land a well-paying job immediately.

What Savings Options are There?

A 529 plan is a savings option setup to encourage parents to save for their child’s college tuition. It is tax free and focuses on saving more in the early years, then easing up as your child gets older. The system will do this automatically, so it offers the best return on investment and ease of use.

Beyond this, you can check your local bank for kid-savings options. These may have lower returns, but will offer more flexibility. Using a traditional savings account means that you can give your child a lump sum to spend on rent or bills rather than college tuition if they prefer.

In a world of uncertainty, offer your child a better future with smart savings. If you haven’t started yet, it is never too late. However, the earlier you can begin setting money aside, the less you’ll have to contribute for the largest return.

Image Source: https://unsplash.com/photos/SAHBl2UpXco

About the author

Chase Rimmer

Chase is an expert in finance and uses his expertise and understanding of links between different financial products and life stages to analyze the latest finance news and products. When he's not writing you can find him in first class using his credit card points. Or staying at home with his cat if he's not saved enough yet!

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