How to Start Saving for Your Childs Future

When you take an active role in your own financial situation, it allows you to use your own experiences with money, as an  an opportunity to teach your children. It’s possible to help your child start saving for their future today by showing them ways a parent saves in their own life.  By planning ahead, you can help your child learn the importance of saving and the value of money.

Start a savings account

When your child is born, one of the best investments you can make in their financial future is to start a quality savings account. My wife and I have both a savings account and an ISA plan for each of our children. Though we aren’t able to contribute to them in large amounts, we did make a sizeable contribution upon their birth, and then regularly save. Even small amounts can add up over time.

Set up a direct deposit into your child’s savings account.

Though you may not even think you have any money to spare a month, you’d be surprised how much you can save with only small deposits every month.  Signing up for direct deposit from your paycheck into your child’s savings account helps parents budget for savings first and extras second.

Keep a record of how much you deposit and when. Include your child.

One of the most important things you can do to teach your child about finances is to go over their savings account with them on a regular basis. Let young children see the deposits and interest. Including your children in the savings process can help them develop a respect and an understanding of banks, banking, and the importance of savings.

Don’t save alone.

Once your children are old enough to earn money with part-time jobs, insist that they always deposit a percentage into savings. Encourage them to make extra contributions of birthday and graduation money, too. When my children get money for birthdays, we allow them to take a small portion and buy something they want, and then with the remaining money, it goes into their best Cash ISA.

Allow teenagers to make small withdrawals, but with parental guidance.

If your child has a college savings plan, you won’t have to worry about this issue, as that money is specifically earmarked for college savings. However, if you have a savings account for your child, the when’s and where’s of giving your child access to their money is a grey area. The option my parents utilized, and one I plan to implement as well, is to allow children to request money from their savings account for a large purchase, and to agree on the amount that can be withdrawn with their parents. I wasn’t allowed sole control of my savings account until I went away to college, and then, I knew I needed to make that money last for college and beyond.

No matter what your own financial situation, it’s possible to help your child start saving for the future today. By planning ahead, you can help your child learn the importance of saving and the value of a dollar.