Not everyone is lucky enough to be born with a trust fund. Most of the time, people have to work hard and save to get the things they want or need. If you have children (or are planning on it) and can’t afford to raise them with silver spoons in their mouths, you should consider signing them up for a savings account. The sooner they learn to save, the sooner they can start buying things on their own. Read on to find the seven things your children should save for.
Even before iPads and laptops, children wanted electronics. Whether it was an Atari or an Xbox, a video game system was the ultimate Christmas present. With so many different electronics your kid surely covets, he should be saving up to buy the one(s) he wants the most. You may be able to get him that Playstation for his birthday, but if he wants an iPod so badly he should earn it himself.
Saving up for big-ticket electronics is a great way to show your child the value of money. You can take it one step further by having him pay for his cell phone bill. He’ll learn responsibility and money management — skills everyone needs in the real world.
Instead of handing your credit card to your child with an “emergencies only” policy, he should save up to face the unexpected. If your child’s car breaks down, he needs to have a safety net to get it moving again. If he cuts his finger open trying to open a can of tuna fish, he should have money to handle the hospital bill, or at least the copay.
No matter the severity of the emergency, your child should have enough in the bank to get by if he needs to.
Outings With Friends
All a teen wants to do is hang out with his friends. Whether it’s going to see the latest blockbuster, attending Britney Spears’ newest concert, or just grabbing food at the local diner, your child should pay for it. Adding a social aspect to his budget will help him learn to prioritize as he figures out what his money should go toward. If he wants to see that $20 movie this weekend with his friends, he might not be able to afford to join them out to eat the next day.
One of the biggest expenses when it comes to children is a car. Your child won’t be asking you why he can’t have a new Lexus if he has to pay for his own car. This is a big stepping stone for him because not only is the car a large expense upfront, the monthly payments and the insurance are both ongoing expenses he needs to account for.
Helping your child with his first car, if you can afford to do so, helps to ease him into this responsibility he’ll most likely have for the majority of his life. Getting him familiar with the process of multiple monthly payments will help ensure he won’t stumble when he takes on all the responsibility one day.
Of course, an even bigger expense than a car is a college tuition. The cost of credit hours, books, supplies, food, and dorm living all add up to cost a pretty penny. According to The Economist, students who graduated in 2011 left college with an average debt of $26,000. By having your child save up for college well in advance, he won’t be digging through the couch cushions for change so he can eat dinner that night.
Your child should also look into scholarships and grants; it’ll save the money he would use on tuition for food and supplies. Putting the effort in in the beginning will give your child invaluable peace of mind as he steps foot into class on his first day of college.
It may seem a little early to talk about retirement, but this is one of the most important things a child could save for. With the amount of social security your child will receive decreasing by the day, having a retirement plan set up is a smart way for him to prepare for the future. Starting early means he will have saved up a sizable nest egg by the time he is ready to retire, and he won’t have to work for the rest of his life.
One way your child can start saving up is by creating an annuity. If he puts money into it now, he’ll have secured a reliable cash flow for his retirement years. Check out the FI annuity calculator to find out how much your child could save.
If you help your child start saving for these seven things, you and him will both be thankful. Not only will your child be capable of handling his own expenses, he willl have learned some invaluable life lessons that he can pass on to his own children.
Author Bio: Samantha Ducati is a loving wife and a mother of 2. She loves reading and writing so much that during her free time she writes about anything and believes that a pen is mightier than a sword.