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When you’re ready to start a family, or you’re adding a new addition to your current one, there are many factors that mean your entire life will become vastly different than your old one.
Aside from losing sleep from a restless baby, don’t add to that exhaustion by not being financially prepared. Instead, keep these helpful tips in mind when thinking about beginning a family of your own.
#1) It’s Never Too Early
As soon as you know you’re ready for a family, there’s never a better chance than now to start putting away money for your child’s future.
One way of doing so is to put a little away each month. As little as $50 or more will be more than enough, especially in 18 years, yielding close to $20,000.
Even if you have more than one child, try putting away at least $20 per month per child, so that they all get have a nice chunk of change when they’re ready to start college.
#2) Consider a Savings Plan
A 529 college fund or savings bond are both great ways to get a head start on your saving up for the next generation.
By using a tax savings, you’ll not only give your child a head start, but might be able to contribute to funding their higher education, such as graduate school or any other training programs they might be interested in.
A tax free way to saving for college is normally tax deductible only if the money is going towards education, even if it’s vocational college.
#3) Teach Them Early
As soon as your children are old enough to understand what money is and how it works, it’s a good idea to teach them that money is a privilege, not a right.
One way of doing so is to have them add a little each month to their own college fund. If you contribute $50 per month, then they can give $5 of their own money. If they are small children, then something as little as 10 cents is enough to suffice in order for them to understand the gist of the importance of savings. On the other hand, if they are much older, even old enough to work, they can contribute as much as you have planned out for them.
Kids who have to earn their way understand the benefit of saving much better than children who have everything handed to them. It’s best for them to understand the appreciation that comes from handling their own finances, which will come handy later in the future when they are out in the “real world”.
#4) Do What You Can
Be consistent in everything that you do. If you are normally able to contribute $100 each month towards a college fund, but have ran into hard times, simply do what you can as any little helps.
Also, if you can, try to increase the amount so that your contribution will grow considerably.
#5) Tuition Plans
Tuition plans are alternative plans to 529’s. If you know for sure that your child will attend a public or state school, then a tuition plan will allow you to purchase tuition credits ahead of time, even before they start school.
The only obstacle is that if a child chooses to go to school out of state, they’ll get a refund of their money but not necessarily the benefits of the plans. Tuition plans also retain the same protections as the 529 plan only without you being effected by an unstable stock market.
Also keep in mind, that it is possible to have both the 529 plan and the tuition plan to help pay for your child’s college. One can help pay for your child’s costs towards tuition, while another can help pay for other charges such as dorm room fees, food, etc.
As with anything in life, it’s always good to have a plan in case of any hiccups along the way. However, obstacles that keep you from reaching your goals could come up, so it’s always best to have a backup plan for your original plan as well.
In any case, when thinking about starting a family, to ensure a secure future for your child, keep these 5 tips in mind.
What do you think? What things have you already started to implement into your child’s education? Your feedback is always appreciated!
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