Saving money for your children is an important way to set them up for the future. It is also an excellent way to show them how to be financially responsible and ensure they learn to manage money from a young age. You can set aside money for your kids in many different ways, and it can help to choose a variety that will offer various advantages to your children as they grow up.
Take Steps To Educate Them On Financial Responsibility
It’s never too early to start teaching your kids about how to manage money responsibly. Of course, the way in which you teach them will need to be tailored to their current age. It would be best if you taught them about saving money, for instance, by encouraging them to save a certain amount of their pocket money each week.
It would help if you also taught them how they could earn money in the future. Discuss future career options as your children grow to help them start considering their futures early on. You could encourage them to get a part-time job when they are old enough.
Open Their First Bank Accounts Early
The earlier your children have a bank account in their names, the better it will be for their credit score. It is a good idea to start them off with a basic account aimed towards children. Children can start managing their own bank accounts from the age of seven, though they will, of course, need your help. Ensure that their personal bank account is separate from any savings account you set up for them until they are old enough to handle the responsibility.
Be Prepared For Different Eventualities
What you save for your kids can have a significant impact on how their lives play out. For instance, you may be able to save enough to ensure they don’t need to take out student loans at university or enough to help them onto the property ladder. For bigger life goals, it is vital to ensure you have a lot saved. You could consider ways to invest the money set aside for your kids to create even more significant returns.
It is also essential to be prepared should the worst happen. Life insurance for yourself and your partner could go a long way to ensuring your children’s financial security if you were to pass away unexpectedly. You could also consider pension options that will give your children a payout if you pass away, and that will mean you and your partner will be self-sufficient in your retirement. There are extensive guides on Drewberry that breakdown the different options available.
Let Them Keep A Piggy Bank
From a young age, you could consider giving your children a piggy bank to fill with their spare money. This can help them learn that money is something to be taken good care of and has value.
You could start them off with a small amount of pocket money and let them know that they will have to take care of their money and ensure that they have enough if they want a treat at the weekend. This can be a great time to start teaching them about the different values of coins and notes and what they can buy with their savings.
Put Money In A Savings Account
It is a good idea to start your kids’ savings accounts as soon as possible. You could consider setting up a high-interest savings account that you put a set amount in each month from when they are born. Even as little as £10 per month will lead to a tidy sum when they turn 18, though of course, the more, the better. It is worth looking into junior ISAs as well.
Consider Child Pensions
While your children’s retirement may seem like a distant prospect, it can be helpful to prepare for their future and ensure that they have the means to live a full and happy life at all ages. You can set up a child pension at any time if your children are under 18, and once they become adults, it will be transferred to them.
They can then continue to make contributions to it and build their own nest eggs. A child pension cannot be accessed until ten years before their state retirement age, meaning that they will be mature adults by the time they can utilise the money you have saved for them.
The Bottom Line
Setting aside money for your children is a lifelong task. It is essential to teach children about the value, importance, and management of money and ensure you have some money put aside for their future. It is best to start as soon as possible to ensure that you and your children get the most out of your financial planning.