Why Save For Children

Why Save For Children ?

We all want the best for our children.  We want them to get the best education, get ahead, get a good start in life.

Even before our children are born, we dream about who they will become, what they will achieve and how they will develop into such great adults that we can bask in their reflected glory. Its natural and part of the nurturing instinct we all have within us.

Happy child with painted hands

We know that most likely somewhere down the line, we as parents will have to fund school holidays, cars, university fees and weddings. Despite the fact that rights of passage such as these are expensive – we look forwards to them.

The average cost of a wedding in 2013 was £18,000

Going to University for 3 years now costs £51,000

A 10% deposit to buy the average first time buyer property is now £18,700

With good financial planning – all of these costs can be dealt with in advance rather than creating a millstone of debt which you or your children can carry about with them for years after the event.

In addition to providing our children with a loving home, a safe environment and a great education we can also provide our children with a knowledge about money. Creating a positive attitude towards saving and planning for the future is something children will always thank you for in years to come.

Personal finance is not a subject thats not taught at school in the UK (though it should be) – because its not in the interests of banks for us “people” to have in depth knowledge on the subject. If we were all financially savvy – who would they be able to sell their loans and credit cards to? How could they manage us and keep a large proportion of the population indebted and trapped by the bonds of financial servitude. Working to pay off their debts, working for the banks.

Putting money aside on their behalf and nurturing a saving habit can give your child massive advantages in life. Allow your children to turn into young adults who understand the benefits of being a cash buyer over a credit card / loan buyer.

As good parents, we try to instil good positive social and academic habits. We teach our children to eat their greens, tidy their rooms, not to leave doing their homework to the last minute, help around the house etc.  But what do we teach them about handling money?

The modern education system is designed to get children to pass exams – which is great. But it leaves the learning about  how to manage your finances to your parents, television or in a worst case scenario – no lessons at all.

But when it comes to teaching children about managing their finances there are many things parents can do to help their children.

The best thing a parent can do is lead by example – children learn so much from copying the behaviour of those closest to them. Are your own finances in good order? Do you have a wallet or purse full of store cards and credit cards and not pay off the full balance every month ?

The best example you can set your child is to set up a savings account for them as soon you can, and contribute towards it for as long as you can.

If doesn’t matter if the amounts going in are small (life’s expensive), the important thing is to create the saving habit within your child and to let them discover how savings grow over time and can be used to buy the things they want.

Albert Einstein said that his greatest discovery was compound interest (how money makes money).

The phrase money makes money is a phrase that’s commonly used today – especially by those who have none, Its a great excuse for not having any.

I’ve been stashing £100 away for 18 months now for Junior Get Rich With Me – its stashed into a high risk Investment Trust called the Aberdeen Asian Smaller Companies Investment Trust. Take a look at this previous blog post here. Its not suitable for everyone as it can be quite volatile and you might not get back as much as you originally put it. If you are worried about the prospect of investments falling in value you should stick to deposit style accounts rather than investment accounts.

I hope to be able to fund his “life events” without recourse to more debt. Its not easy finding the money sometimes but we’ve never missed a months savings yet.

Comments

  1. We don’t have kids yet, and we won’t be entertaining the thought of them for some time now, but we do want them eventually and my goal has always been to save quite a bit of money before we have them. I think you need a much larger emergency fund if you have kids, and we want to be able to save for their education when we have them. Right now our focus is retirement savings.

    • getrichwithme says:

      Thats fair enough – theres a time and a place for kids. I had my first child when I was 28 my second when I was 46. Both perfectly timed.

  2. Saving for kids is important but more so is financial education for them I think. I intend to teach my daughter the value of money, how to make it and how to spend it wisely. (I hope!)

    • getrichwithme says:

      I agree – our education system lets children down badly when they dont teach them the basics of personal finance. Its a necessary life skill

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