How to Help Your Kids Save for College Early On

How to Help Your Kids Save for College Early On
  • Opening Intro -

    As a parent, you’ve probably read plenty of helpful financial planning articles and stories about the high cost of a college education.

    Many parents unfortunately do not have the financial means to fully fund their child’s education on their own, and children are required to pay for at least a portion of the expense themselves.

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Some will take out loans, but you may want to reduce your child’s student loan debt early on. By encouraging regular savings at an early age, you can accomplish this goal. Focus on these steps as you help your child to focus on savings.

Set Up Savings Accounts for Your Kids

When a child is very young, it is up to the parents to begin saving money. Start by setting up a custodial savings account under your child’s name with the bank you currently work with. Ensure this account has no fees that will eat into the account balance. You may consider starting this account off with a modest initial deposit to get the ball rolling.

Encourage Savings Before Their Working Years

Children receive money from various things well before they are old enough to get a real job. For example, even in their baby and toddler years, they may get money for their birthdays or holidays. Save this money so they can enjoy a nice starting point when they are old enough to understand the concept of saving. As they get older, you can show them their savings account balance online, and you can even take them to the bank with you so they can watch you deposit their money into the bank. Get into the habit of talking to kids about finances and saving money as early as possible

Set Up Automated Transfers When Your Teen Gets a Regular Job

Children grow up quickly, and many will want to get their first real job in their teen years. Some teens are responsible for fuel costs, insurance on their car, and other expenses. Take time to help your teen set up a budget that accounts for these expenses, but include a healthy amount of money to be contributed to savings as well. Take the additional step to set up automated bank transfers so that money is contributed toward savings regularly.

Show Older Kids How Balances Grow Over Time

Older kids who see their money siphoned out of their account regularly can grow frustrated. They may not see the benefit of saving. Use online savings calculators to help them realize how much money they can save over time, and even how much money they can create if they invest in more lucrative options, such as stocks.

Financially preparing your kids for the future is often easier said than done. There are always instances when kids need or want things, and they are willing to spend their own money in savings for it. It is important for you to keep them on track with their savings efforts. Over time, they can establish a nice nest egg that can be used to help pay for college. More than that, they will be in the habit to continue saving money regularly for their financial future.

College Financing reference:

college financial aid guides

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Categories: Finance