In most families, while your kids aren’t legally adults and are living in your home, their expenses are usually covered by the parents. But as soon as your child leaves your home, to go to college, start a career, or otherwise move into adulthood, their financial support will likely be all up to them. So to ensure that they’re ready for this, it’s wise that you as their parent teach them proper financial skills, especially when it comes to savings.
To show you how this can be done, here are three tips for helping your kids save money for college or adulthood.
Develop The Habit Of Saving Early
According to Leslie Jones and Laura Schlachtmeyer, contributors to the Consumer Financial Protection Bureau, kids usually learn habits about their own finances from watching their parents during their elementary school and high school years. Knowing this, you should try to be careful with how you handle your own family finances so that you can be a good example to your children.
One example you should be sure to set is to start saving money. If your child ever makes or earns money, encourage them to set aside some of that money for savings. While having long-term savings is great, teaching them to save for shorter amounts of time so they can pay for something more expensive that they want can also teach them valuable lessons, too.
Get Your Kids Their Own Savings Account
When your kids are little, having them keep their money in a piggy bank or other at-home bank makes the most sense. But once they start saving a decent amount of money, you should encourage them to set up their own savings account with a bank.
Maryalene LaPonsie, a contributor to U.S. News and World Report, shares that getting your kids their own savings account that you co-own with them can help them learn a lot about money and working with financial institutions. For most kids, exposure to something like this is invaluable for learning about saving money and money management.
Choose An Investment Vehicle
If you’re wanting to help your children to grow their savings even more, investing some of the money or your own money is a great way to do this.
There are lots of ways you can invest money, like term deposits and CDs. But according to G. Brian Davis, a contributor to Money Crashers, using a 529 savings plan is a great way to grow their money for college without having to pay tax on that money. As long as your child is planning on spending this money on their education, the tax benefits could be great.
If you’re wanting to help your kids save up for their future, consider using the tips mentioned above to find simple ways of doing this.