Raising a child can be a challenging task, but getting them set for a sound financial future doesn’t have to be. Taking these three steps early on can put your child on the right track from the beginning.
Opening a separate account for your child is the first step toward jumpstarting their savings. Having a specific place to deposit money that family or friends give for birthdays or other special occasions will help keep it separate from your own finances. As your child gets older, it will also give them a way to track their own savings and see how their money grows.
During the early years with your child, it’s likely that you’ve had to make what feels like a million decisions but choosing a savings account for your child can be an easy one. Look for an account that features perks, like a special youth savings rate, that will help your child’s savings grow. Make sure you choose a financial institution that you trust, and just like any other account, avoid those that come with a lot of fees or high minimum balance requirements. You want to make sure that every penny possible is growing for your child.
Once your child’s account is open, make sure you complete any paperwork that will make saving for your child even easier. Take advantage of linking your own account with your child’s so that you can deposit money directly into their savings.
If you’re able to take it a step further, consider setting up an automatic transfer from your account to your child’s. Add saving for your child to your list of monthly bills and have the money move between accounts each pay day. If you feel like you don’t have much to give, don’t worry. Every little bit counts and will add up in the end.
Your family and friends may want to shower your little one with toys, clothes, and other goodies to show their love. While there’s nothing wrong with these kind and generous gestures, even the most appreciative person may find themselves buried in this “stuff.” Once you have your child’s account set up, let family and friends know that you’re working to build a solid financial future for your child and that it would be very meaningful to you if they’d contribute to their savings instead.
If that’s not a conversation you’re comfortable having, let your family and friends enjoy shopping for your little one and make the swap yourself. If you know your child will get plenty of gifts on birthdays or holidays, consider making a deposit into their account rather than adding to the pile. They may grow out of the clothes and the toys, but their savings will continue to build.