Every parent is concerned about the future of their children and is aiming to financially organize best as possible, collect enough money reserve in case the kids might need it one day.
Options for saving money for your kids are various, all with the same goal – accumulating a stash of money that will be available for use, once they’re older. However, there are other reasons why saving money and investing for your kids is important. This article will tell you all about them.
1. Teaching your kids, a valuable lesson
As a parent, your kids will grow up adopting most of your behavioral patterns, along with some of the attitudes as well. Attitude towards money is very important. The future filled with abundance is determined by the right attitude, so if you want your kids to enjoy it when they grow up, start teaching them how to develop this attitude.
This way, parents strive to point out the significance of savings, aside from doing the obvious (creating a piggy bank for days to come), and above all help them develop a habit to save money. Money accumulated in such a way has different purposes but is mostly spent on scholarship fees, tuition fees, in a pre-agreed way for a certain period of time. Of course, it can also be used to buy a car, travel, or some other priority your kids might have.
Most parents are used to the standard saving programs offered by the banks, but the financial market is offering other, new, more flexible types of savings and insurance, provided by, for example, insurance companies or investment funds.
2. It’s better than borrowing
Different people have different habits, so some may turn to borrow money every time they need it, instead of thinking on time and creative reserves when possible.
Not so long ago children saving accounts had decent interest rates on savings, but since the financial and deposit market is constantly changing, today’s interests are not so affordable anymore. At places, they are so high, that creating a savings plan does not guarantee a large income. They depend on the saving periods, saving currency and according to that a bonus on the interest is offered if you save for some time. These types of accounts can enable you to periodically add finance and are suitable for accumulating smaller amounts for birthday presents, for example.
Another option better than borrowing is to open a custodial account. These are opened by the parents, as a possibility your kid can own an investment before turning 18. To learn more about these accounts, visit loved.com.
3. Saving and investing can accumulate quite a sum
After some time, accounts such as savings can accumulate quite a lot of money. One of the reasons is because time is a crucial component of savings. For example, if your kid is 3 years old, and manages to deposit approximately 4000 $ every year, by the time he’s 18, he’ll have 56 000 $ accumulated. Don’t underestimate this amount, because even though there will be interest as well, it will still have enough for a couple of quality trips, a decent car, or to cover a yearly tuition fee in a university.
4. The money is safer this way
Opening a savings account in your kid’s name will enable you as a parent to manage the money on the account. As a legal custodian, you can also access the account without other parent’s consent, but the money you’ll have access to is limited, not exceeding a certain amount of money. Each time one wants to access the account for more than the limited sum, they need to obtain consent from the social welfare office. So, in a way, the center for social welfare guards the financial assets by not allowing parents or other legal custodians to take advantage of it. This way, money is safely kept from prying eyes and hands.
5. Saving for major life events
Certain events in life require a large sum of money if you want to make them memorable. By saving for the future of your kids, you are investing in their dreams. You never know what they will strive towards once they are old enough and independent, but whatever it is, a financial injection will sure come in handy.
Most save for education, a college, or a university, but if the kid likes learning, they can also get a scholarship. However, if they are business-oriented, the money you have been saving for their future will be an excellent investment in their business idea. What more can a parent ask for, then an independent child.
Maybe your kid has a dream wedding they would like to make a reality. This money can be of great help in organizing a fairy tale wedding. Or maybe, they’ll be an adventurous type, and it can help them spend a year or two collecting memorable experiences worldwide.
Even if you at one point will no longer be there, to offer your support, the financial legacy you leave your kids with will give them a sense of security. No one can tell what the future holds, but planning ahead and on time can give you as well a sense of ease, that you’ve ensured them enough.
Even if nothing happens and your kids grow up to be successful, having these savings available at all times will make their future more secure. This is something they can always count on.
7. Responsibility and independence
We’ve stated a couple of valuable lessons you kids will learn from your behavioral patterns, however, learning about responsibility and independence is by far the most important one. Available savings will greatly influence the independence of your kids. While on the other hand, you as a parent have a responsibility towards your kids to provide them a safe and secure future.
Saving and investing for the future of your kids, means providing a support platform for their dreams. That’s what being a good parent is all about.