Invest in a Child's Future
Here are 6 ways to plan for your child’s financial future
In this section:
Uncle Sam can help
A great gift for a newborn, you can buy a US Savings bond for as little as $50, and over time, bonds grow in value as they accumulate interest. Best of all, the interest rate is guaranteed, and the investment is safe, backed by the US government.
Investigate mutual funds, savings, money market accounts and other safe places where money can grow. Investing even as little as $50 a month can add up to surprising sums down the road.
Let grandparents help too
Grandparents often have the means to contribute to the child’s financial future by investing in funding options to help pay for college. Small investments begun from day one can grow enormously over 18 years.
Open a general savings account
If you’re able, begin a small monthly savings program for your child. Put as little as $25 a month into a savings account for 4 years, and you’ll have more than $1,200 by the time your child starts first grade! Think how this account will grow through the high school years. Start a ceremony of going to the bank with your child to make the deposit. It’s a lesson in saving.
Accidents and illnesses happen. As difficult as it is to consider the death of one or both parents, it’s important to explore ways to safeguard your child’s financial future. Right now you probably plan to give your child as many opportunities as you can. However, music lessons, orthodontia, summer camps, and a college education are expensive. The death of one or both parents can jeopardize all of your good intentions. Investigate life insurance to protect your child and the many aspirations you have for him or her.
Set up a 529 plan
These plans can be started as soon as a baby is born, but if you haven’t established one yet, you should consider one before your child begins kindergarten. Money invested in 529 college saving plans grows tax deferred over the years. When the time comes to use the savings to pay for college, the money remains free of state and federal taxes.