This post was submitted on behalf of PennyMindingMom.com.
Raising a child is one of the biggest and costliest investments you’ll make when it comes to time and money. However, the love and bonds that are formed along the way make everything that you put into raising your child well worth it in the end. That being said, you want your child to be able to grow up in a financially stable environment and be able to continue that practice when they graduate and enter the workforce. Jump-starting your child’s financial future can take a large amount of stress off their shoulders and can greatly increase their overall happiness. Unfortunately, some parents are either unwilling or unable to jump-start their child’s finances, and as a result, the child enters the workforce with loads of debt and no money saved up. If you were looking to jump-start your child’s financial future, how exactly would you even go about it? Here are some tips and tricks that you can employ to ensure your child has a head start when it comes to finances.
One of the best ways to jump-start your children’s financial future is to teach them the importance of saving money and helping them save. There are many lessons you can teach children when it comes to saving, and tools are available to help you in your mission. Perhaps the best way to teach your children how to save is to set a positive example and save some of your own money. It is shocking to see just how effective practicing what you preach can be when it comes to instilling values. Despite all your efforts, it still is unreasonable to expect children to grasp the true value of money and saving. Due to this, you might want to help them save some of their money. One idea is to set up a savings account for them. When they receive money from gifts or from allowances, put half of the money in a savings account and give your child the other half to spend. When your child turns 18 or graduates college they then get access to their savings account. This can be a great way to jump-start your child’s financial future, as they will already have a good chunk of change saved up by the time they enter the workforce.
Another way to jump-start your child’s financial future is to help them invest some of the money that they have saved over the years. This is a great strategy to pair with something like the saving strategy that was outlined earlier. However, instead of saving all of the money in a savings account you can invest some of it. This is a great way to earn even more money for your child and can jump-start their financial futures even more. In addition, you and your child can track exactly where the money is invested and how it grows. This can be very interesting and a great lesson in teaching your child about the value of money, saving, and investing. Your child can then take the lessons that they have learned and apply them to future investments when they grow up and have their own disposable income.
Aid With College
Perhaps the most effective way to jump-start your child’s financial future is to ensure that you minimize their spending on college. Tuition costs are rising rapidly, and students have to take out an alarming amount of money to afford college. This large amount of student debt can cripple them by lowering their credit score and forcing them to make payments for years. However, you can help your child by saving for their college and starting a college fund. If you start saving before your child is born, you should have a sizable amount saved up by the time your child goes off to college, likely enough to pay their costs. This can go a long way in jump-starting your child’s financial future by ensuring that they stay away from the pitfalls of student loan debt.
A great way to help out your child’s finances is by providing them with financial aid in the form of hand-me-downs. For example, instead of trading in your old vehicle, you should try to keep it and allow your child to use it instead. By doing this you are taking a major financial burden off of their shoulders, as they won’t have to purchase a mode of transportation before they get their feet under them. There are other ways that you can help them in this aspect as well. For example, letting your child move in after they graduate and attempt to enter the workforce can be a big help too. This allows them to get a few months of pay under their belt before committing to an apartment. Even if you charge them a small amount of rent, it will still be a big help and go a long way in jump-starting their financial future. Without major financial commitments like student loans, car payments, or crippling rent bills, your child will be well ahead of the pack and can begin taking steps to buy a home right out of college.