Many parents want to help their children get off on the right financial foot, and this often means opening a child’s savings account. This is a type of account that is designed specifically for children, but parents are often custodians of the account until the child reaches maturity. This means that one or both parents will have direct control over the management of the account. Even when the child is a teen, the parent will manage the account for him or her. If you are ready to get started saving money for your child, you can easily follow these steps to make the process easier to do.
Adjust Your Personal Budget
It may sound seemingly selfish, but it is critical that your own personal financial situation is secure before you start planning for your children’s future. You need to have enough funds to properly provide for your family. More than that, you need to be saving a decent amount of money for your own retirement needs before saving for your kids. The reason for this is because there will come a time when you are no longer able to work, but they will be able to work and support themselves regardless of whether they have the savings account you established. Take time to pay down or off personal debts, including car title loans online. Furthermore, adjust your finances so that you have eliminated unnecessary spending in your budget. Then, ensure that you are saving enough money for your own financial future. Any additional money available in your budget can be allocated for children’s savings accounts.
Set Up Automated Account Transfers
After you have determined how much money you have available to save in your children’s accounts each month, you can open savings accounts for each child. In some cases, you may be able to do this online, based on your bank’s policies. You often need to transfer an initial sum of money into the account to open it, and you may be required to keep a minimum amount in the account at all times. Then, set up automated account transfers so that the funds are transferred in an amount that you are comfortable with on a regular basis. Be sure to adjust your personal budget to account for this activity.
Manage the Funds Over Time
Over time, you will notice that your children’s account balances grow to a sizable amount of money. It may be more advantageous to use different types of accounts to manage their funds and to improve growth. After all, regular savings accounts earn a very modest return. While you may want to keep some of the funds in a savings account, you may consider purchasing CDs or even opening a child’s investment account. With an investment account, you may be able to purchase stock or mutual fund shares under your child’s name for additional growth.
The sooner you get started saving money for your children, the greater the account balances may be when you turn the money over to your adult children. Now is an ideal time to open a savings account and to begin saving money. However, ensure that you save a comfortable amount that leaves ample room in your budget for daily expenses and for your own savings needs.