Create a Savings Account for your Child

Let's cut directly to the chase. You should start planning to save for your child's future as soon as you begin picking out furniture for the nursery room. Yes; as soon as you are aware that you're expecting, you should begin contemplating how you're going to save for your child's education and general financial future.

You may be thinking to yourself, "What? I haven't even budgeted for diapers yet! Surely I can wait a few years before deciding how I'll send my child to college!" Well, yes you can wait awhile to start saving for your child. But, just like saving for your retirement, the earlier you begin saving for your child's future needs, the better off you both will be. For example, through the magic of compound interest, putting away $100 a month from your child's birth to age eighteen will give you approximately $35,000. If you start saving for his or her education just five years later, you'll have to lay aside $165 every month to reach the same amount. Wait until age ten to start, and you'll have to save $300 each month to get to thirty-five thousand.

When saving for your child's needs, it's normal to automatically think of college tuition – and you should. College graduates earn an average of about 60 percent more during their working lifetime than those with only a high school diploma. There are many methods that you can use to save for your child's future tuition. Some of them are specifically designed as education-savings plans, while others may be more general in scope. All, however, can be effectively used to help meet your financial goals.

It's a good idea to open a savings account for your child that he or she can eventually contribute to. In addition to providing some savings when they go off to college, a portion of the funds can be used – with your guidance – to purchase things throughout their childhood that they may want which might not otherwise be within the family's budget. Furthermore, you'll find that a child who's raised with growing control over saving and spending his or her own money is usually grows into a more financially stable adult.

If you're knowledgeable, you might also begin investing in stocks with your child at around age ten. Let him or her pick several companies and get annual reports from each of them. Then, you can work together to whittle down the list to three companies, preferably in different categories. For example, you might help your child to learn and earn with stocks from their favorite food or drink, a toymaker and a technology company. Each of these operations will offer you different opportunities to teach your child what you know.

Saving for the future is important for your little one. Do your best to start saving early, even if you're only able to put away a few dollars a month to begin. While you're at it, use this opportunity to assess your own savings situation, as well. The better you are at saving for yourself, the better you'll be at saving for your child and teaching the importance of saving for themselves as they grow out of diapers and into adulthood.

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