Tips For Creating A Savings Plan For Children

Raising a child is an expensive responsibility. Right from the day they are conceived until the day they gain financial independence, the series of financial responsibilities parents have to carry out can be frightening. After all, money doesn’t come easy. Those who have a lot of it struggle to use it right for the child’s well-being. 

Regardless of your financial condition, you need a plan for your children. You need to save up for your children’s future. And start now! There’s so much coming up in the future; from their shockingly not-so-cheap diaper costs to the humungous student loans, you never know where your child might need the help. 

You’ll anyway need to do a lot of thinking. But, in the meantime, there is a fair idea of where you can start. Here are a few tips for saving up for children.

1. Open a children’s savings account

   You’ll find a children’s savings account at the top of your starter kit for saving for children. Head to the bank, consult regarding the existing savings account schemes, and apply for the best one. These accounts are co-owned by parents.
   You can make timely transfers to this account for a common purpose. Your children will have access to these accounts and can use the amount stashed in them, but parents will supervise them. This way, you’ll be able to contribute to the savings and assess the money management skills of your child.

2. Health Insurance

   Understand well that health is an expenditure-incurring area, and at times, the burden can be too much. Thus, a good health insurance policy is a must.
   If your job doesn’t come with a health insurance policy, it is best you apply for one. Depending on your financial condition and needs, you may want to opt for individual health insurance or family health insurance.
   A family floater plan, for example, insures all family members under one insurance plan. However, if you choose individual insurance plans, then you’ll pay separate premiums and may even have separately insured sums.
   One more thing: if you have purchased a high-deductible family floater plan, then you are eligible to contribute as much as 7,750 USD to a health savings account. A health savings account allows money to grow tax-free.

3. Have a college savings plan in place

   Going to college is something every parent awaits with bated breath. We are excited to have our children attend university but nervous about the money that will go out with it. So, plan well in advance.
   Start a college fund and make periodic transfers. A high-interest-yielding savings account should do. However, many parents have shown interest in goal-oriented investments in several collective investment schemes such as mutual funds. The money is parked for the long term and grows through compounding.

4. Make Major Alterations to Your Lifestyle

   You don’t have to give it all up for the sake of the child, but you can regulate your lifestyle. Look at your and your children’s lifestyles closely, identify the most capital-intensive areas, figure out whether the expenses can be contained, and inculcate changes to remedy the losses.
   For instance, you’ll have to control your urges to make impulsive purchases for your children. Don’t give in to every demand of theirs. Go on planned trips more rather than unplanned ones. Create a budget for yourself and for your children so that there’s a mental limitation upon expenses.

5. Teach Your Children The Value of Money

   Start early. You won’t hand-hold them all their lives. They will have to step in and take charge. And, for that, they’ll have to acknowledge the value of money. Reinforce their good behaviors through monetary rewards. Challenge them to save up a particular amount so that they take it up actively.
   Don’t make it easy for them. Being too liberal with money will affect the way your child sees money. A thankless creature with no respect for hard work is someone you wouldn’t want to see in your child. If your child is involved in saving up for his own future, your job is half done already.

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