Putting some money away for your children’s future is a great way to be prepared for the inevitable costs which will arise as they get older. It can also provide a solid platform for them later on in life when it comes to college, university or even buying their first property.
It’s never too early to start saving for your child and people on various income levels can save. We’ve put together some efficient ways you can save.
Start small if you’re on a lower income
You don’t need to be putting away £100’s each month. You can start smaller at 50p or £1 per day for example which soon adds up to a comfortable amount. For example, £1 per day equals £365 per year and therefore £3,650 over 10 years. That’s a solid foundation, especially if you can either combine it with another savings technique or are hoping for an increase to your income in future.
If you think you might struggle with a small amount initially, you can always try cutting down on a non-essential cost each month – for example maybe less trips to the coffee shop on your daily commute.
Start a child saving bank account
You should consider opening a bank account for your kid as good way to organise their savings and separate them from your own.
You can also teach your child early about the benefits of saving so that they can start to put away a portion of their pocket money – if they choose to of course! Teaching your child the benefits of saving from an early age could give them a big advantage with money management later on in life. There are many child friendly prepaid cards available for children that come in an app so they can save their own pocket money.
If you’re in the UK, then a junior Isa could be a good option for you. The money will be entirely tax free and accessible for your child once they turn 18. Although there’s an annual deposit limit and no government contributions, you’ll tend to find that the interest rates are higher for the junior Isa and you have a choice of investing as cash or in stocks and shares for preferred risk to return.
Premium bonds are a way of saving in which you give up the interest you’d usually receive, in exchange for entries into a frequent prize draw. Prizes range from £25 to £1,000,000 (although the chances of winning the top prizes are extremely slim. However, by putting money away in premium bonds, you’ll be saving as well as having a chance to earn a little more on top.
Saving for your child doesn’t have to be expensive and the long-term benefits could be very rewarding. Providing you can afford it, putting plans in place now for your child’s future could save you in the long run.
However, if you ever find yourself struggling to cover your immediate outgoings, then a form of consumer credit such as a short term loan could work for you as long as you can pay the monthly repayment amounts.