Caring for your kids’ future starts the moment you learned you are pregnant. It doesn’t begin when they’re already out in the world, making new friends and learning from their mistakes. You just don’t suddenly realize that you need to save for college or other things they want to pursue in the future. You start saving now. Parents have to make the right choices and decisions so their kids can have the bright future they imagine them to have. They have to put their money in the right places, so their kids are secured hopefully for life.
Not everyone is born with a silver spoon in their mouth. Not everyone is going to be a rags-to-riches story. You will not magically invent the time-travel machine and earn billions of dollars. Windfall, inheritance, lottery, and a conglomerate are not in the cards for everyone. You need to make do with what you have. That being said, here are the smartest ways to save up for your kids’ future:
Start Earlyâ¦ Way Early
When should you start saving for your kids? The moment that positive pregnancy test comes out, that’s when. Many parents wait for the “ideal” time to save. There is no “ideal” time when it comes to saving. You have to start as early as you can. Even $20 a month will go a long way toward saving for the future. If that’s what you have these days, then why not save it? In the future, when you have more, try to allocate a portion of your salary to your kids’ savings or emergency funds.
Invest the Money
Why let the money sleep in the bank? When the time is right, you can invest the money in equity trust funds. They can use the earnings from the trust fund when they’re off to college. Other options are mutual funds, the stock market, and other long-term investments. While you should have a separate account for cash savings, invest the bulk of your money. Savings accounts have terrible low-interest rates. You won’t earn from those even if you’re saving hundreds of thousands of dollars.
Open a College Fund
If you want your kids to pursue higher education, you should consider starting a college fund. There are a lot of schools accredited by college plans, which means that they will accept payments from these fund managers. The fund is not your ordinary savings plan. It will compute the expected tuition rate for college once your kids are off to get their degrees. You can even choose the university or college that you want to prepare for.
Make sure that the college fund is separate from the emergency fund and the savings account. This fund is purely for your kids, whether they want to go to college in the future or use that money to start their own business. If they have scholarship grants, they can use that money to pursue a post-graduate degree.
Save, Save, Save
Not everyone understands how an investment works. It’s okay if you don’t. You can research it first before diving into it. Meanwhile, you can simply open a savings account and put your money there. Sure, the interest rate is so low that it’s almost comical, but your money is safer in the bank than in your own hands. A little trick so you won’t spend that money is not to bring the debit card with you or not have a debit card at all. Withdrawing over-the-counter will be much harder when you don’t have a debit card.
Get a Life Insurance Policy
Life insurance will pay your child benefits after you die. That’s whether or not you’ve completed the term. When something happens to you, one of the fears you will have is how your kids are going to live and attend school. The life insurance policy will take care of that. There are two main types of coverages: term and permanent. A term policy pays the beneficiary if you die within 10 or 20 years while the permanent policy has coverage no matter when you die.
If you are young and healthy, the permanent policy is the right choice. If you’re near retirement, the term policy is the more practical option. It’s important also to consider what you can afford before signing that contract.
Starting very early when it comes to saving for your kids’ future is the key. You will have more opportunities to invest and grow the money. By the time your kids are off to college, they will have something to fall back on if they won’t get a scholarship.