If you’re building a family, you’ve probably already learned that life is very expensive for parents. You want to give your child everything they need today and what they will need tomorrow. This may seem impossible sometimes, particularly if you are on a limited budget. But there are always ways to save for your child’s future and it could amount to way more than you think. Here are our best tips to help you save for your child’s future because even a small savings beats no savings at all.

What Do You Need to Save for Your Child’s Future?

You don’t need to be able to have a million-dollar trust fund for your child. This can be a very discouraging thought for the average family and can throw you off from saving anything at all. It isn’t so much about how much you save but how you save it that really matters. When saving for your child’s future, you may want to have Money set aside for their education and for their future home or life as a parent themselves.

How much you put away will be based on what you earn, but remember, it’s not how much you can save, but how you save it. This article will teach you how to save for your child’s future and grow that little nest egg as much as possible without having to add more money than you can afford to.

Tips to Save for Your Child’s Future

If you are looking to save for your child’s future, then you are probably wondering how much to save, when, and how to invest it. Here is a closer look at the bets tips we have to help you save for your child’s future.

Set Up a Realistic Goal

You may really want to save up $500 per week for your child, but is it feasible for you? When you save for your child’s future, you don’t need a huge amount – you need a realistic one. Start by listing all of your expenses and your income into a spreadsheet. This can help you keep track of how much you need to live and how much you realistically have to spare. Even if that amount is only $25 a week, it’s better than setting an unrealistic goal.

If you set a goal you can’t reach, you will either wind up in debt to save it or you will fall off the wagon and end up saving nothing at all. The best way to save is slow and steady. As you are able to save more, go for it. But if you can’t, even a nominal feel adds up over the years.

Decide Where to Save It

A traditional savings account is sure to earn you almost nothing in terms of interest. You don’t just want to save your money, but grow it. You can invest it in a number of ways to help build that value up over the years. Here are some great investment ideas:

• Tax-Free Savings Account (TFSA): Anything you put into your TFSA can be invested in stocks, GICs, or mutual funds. The earnings you accumulate are tax-free. Though there is a maximum annual contribution allowance, you can still earn some good money over the years, particularly if you can allow the money to sit there for many years.

• Registered Education Savings Plan (RESP): Contributing to a RESP has many benefits. Firstly, you can gain interest. But there’s another benefit. The government also makes contributions to it. For every $2,500 you invest, the government grants another $500. The interest accumulates year after year and before you know it, even a small savings can grow rapidly.

• Stock Market: The stock market is less secure and you certainly need some know-how to guidance from a professional to do it right. But if you have a long time to go before you need the funds, you can afford to take a little bit more risk today for a higher gain tomorrow.

• GICs: On the safer side of things, you can also invest in a GIC. It’s a long-term commitment that brings in more interest than a typical savings account but maybe less than a mutual fund or stock. However, it can increase your savings total over a long period and it is always a safe bet.

Start Today

The biggest mistake you can make is thinking you’ll save more when you have more. You don’t know what the future holds. You should start saving from the day your child is born – or as soon as possible if you haven’t started already. The key to growing interest is time. Money can grow substantially over a long period. The earlier you start saving, the more money your money can earn.

Even if the amount is small, it is still better than nothing. Waiting for tomorrow can be problematic for many people. You may think things will improve, but they may not. And before you know it, your kids will need that money and you won’t have it. Remember slow and steady wins the race.

Invest in Life Insurance

Investing in a life insurance policy for your Children as soon as possible is another great way to save for your child’s future. Investing in a dividend insurance policy can be the start of a very lucrative savings for your child. A dividend policy begins to accumulate dividends once the policy is paid up. Because it is started so early on in their lifetime, the policy can grow very large dividends that can use in the future as adults.

Plus, if insurance rates rise in the future, your child’s policy will be secure. This can protect your child from paying high insurance rates when they become adults. Life insurance can offer a much higher payout in the future if it is started very early on. You can invest in a basic coverage plan that can cost you very little per month. Even if this is the only investment you can afford for your child, it can be a very beneficial policy for them throughout the course of their lives.

Save Cash Gifts

When you children receive cash gifts for their birthdays or holidays, out at least some of it away ibn the bank. This can add up to a lot of money over the years. Plus, it teaches your children that they can’t spend every dime they get. This can help them learn to build their own healthy financial habits as they grow up into adulthood. It may seem like small amounts but even $20 here and $30 there can add up over the years.

Get Informed

If you aren’t very financially savvy, meet with a financial advisor who can help you. Meeting with knowledgeable experts and reading up on current financial news can help you understand more about saving and investing. Learning how to keep your own finances in order and how to grow whatever money you do have can be invaluable to you and your child’s future.

Ask for RESP Contributions as Gifts

Children get loads of toys from their loved ones every year, but we all know they just don’t need all that many. If family and friends are asking you for gift ideas for your little ones, suggest they make a donation to the child’s RESP. The money is put to much better use in a RESP than at the toy store. Every little bit you can add to the RESP increases the amount of interest you are making. Even if your child is too young to understand what is going on, someday they’ll be very thankful for that fund.

Give Your Children Tools to Save for the Future

Saving for your children’s future isn’t just about giving them money, but giving them the tools they need to make and save their own money. Healthy spending habits can help your children stay on the path toward financial freedom instead of the path towards debt.

Teach Your Child to Save, Too

Saving for your children isn’t just about you putting money aside for your children. It’s about teaching them good financial habits so they can learn to save, too. The best thing you can do for your children is teach them how to fend for themselves and maintain a healthy financial profile as they get older. You can start this by helping them open up a savings account and reminding them to deposit funds on their own. Over time, they will see the growth and also learn not to use everything they get.

Get Financial Literature

If you would like to help you children save for a better future, then it’s a really good idea to get them age-appropriate books about finance, saving, and investing. This can help them learn the basic points they need to know to spend the money you give them wisely and to spend their own hard-earned cash wisely, too.

Save Together

Saving is something you can do as a family, too. You can put a savings jar in the house and everyone can contribute and watch it fill up. You can also take opportunities to put anything you can spare whenever you can. For example, if you’re headed to the store to buy something with your child and find out it happens to be on sale, out that remaining money you had intended to spend in the jar. Saving together can help everyone learn about healthy financial habits and it can help you put away even more money for you child’s future.

Managing Your Finances So You Can Save for Your Child’s Future

If you really want to be able to put away a nice little nest egg for your child’s future, you have to incorporate what you want to save for them into your budget. That means that putting money away to save for your child’s future should be thought of as a bill payment – a necessity. It may mean you have to cut in other areas like entertainment, but it will be well worth it one day. To help manage your finances better so you always have a little something to save for your child’s future, try these helpful money management tips:

Live Below Your Means

Living on credit and buying things you can’t afford will not only put you in debt, but it will make it impossible for you to save enough money for your child’s future. Instead, try to live below you means so you always have something extra. You may be able to afford higher car payments but does that mean you need a more expensive car? Evaluate your spending and make sure you aren’t wasting money that you could be saving instead.

Keep Track of Your Finances

You should always know exactly what is coming in, what is going out, and what bills are on the way. If you lose track of this, you may overspend. This can make it very difficult to save money for your child’s future and also sets a poor example of money management for your child. If you are finding yourself losing track start a spreadsheet and track every financial move you make every single day.

Avoid Unnecessary Debt

Some debts are unavoidable, like a mortgage. However, you should try to avoid consumer debt like credit card debt. Avoid running up unnecessary bills. The added interest can be very high and the cycle of dent will then become very difficult to break. If you are at a loss for funds, meet with a financial advisor first to make sure you are doing the most financially responsible thing to help manage your finances.

Minimize the Purchases of Depreciating Assets

When you do spend your money, remember to invest more in appreciating assets (like your home) over depreciating assets (like your car). Things that depreciate simply take your money whereas appreciating assets can grow your money and still give you the things you need. You can always depend on these investments to give you some cash if you need to give your children money in the future. That shiny red, pricey convertible can’t offer that.

Reduce Credit Card Spending

If you have a tough time keeping a handle on your spending, it’s time to chop up some of those credit cards. Try to keep only one or two cards and keep the limit low if you have trouble staying within your budget. Credit cards can be the start of a very unhealthy relationship with spending and get you stuck in a never-ending cycle of debt. Try to use cash whenever possible and don’t rely on credit cards to spend money you don’t have.

Keep Your Savings Separate

Make sure your savings accounts are not easy to transfer money out of. It’s human nature to want to dip into those funds when we are short on cash. However, dipping into your savings can make it very difficult for you to get ahead. Unless you are in serious financial distress, the money saved for your children should remain untouched until they need. If you reduce the capital, the interest you’re earning will also decrease. The best way to grow that money is to leave it there for years, collecting interest on top of interest.

Invest in Real Estate

If you have a sum of money accumulated, you can also put a down payment on a rental property. Real estate is as safe an investment as they come. You can grow your money over time and see a huge return over a period of 10 or even 20 years. Investing in real estate is a great way to invest your money for your children and grow it exponentially. Not many other investment opportunities can bring in a rate of return as high as the real estate market can.

The Golden Rule of Saving for Your Child’s Future

The best thing to remember when it comes to saving money for your child’s future is that you don’t have to forego everything you want or need to save for you children and your children’s children. Try to save about 5% to 10% of your earnings for your child’s future every year. This may not seem like much, but over time, it can certainly grow. The goal is to help your child in the future, not necessarily pay their way through life.

In addition to saving for your child’s future, teaching them the basics they need to know to manage their own finances someday is an invaluable tool. You want to foster independence, encourage your children to get a good education and a good job, and be able to manage their own financial futures responsibly. Raising fiscally responsible individuals is just as important as saving for your child’s future.

All parents want to offer their children the best they can. Offering them a helping hand in their financial future can be one of the greatest gifts you can give them. Remember, no amount is too small. Anything you can save for your child’s future can be helpful to them when they grow up.

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