How To Save Money For Your Kids

Find out how you can save money for your kids. Understand what are your best options and that taking sound financial advice is crucial.

Kids cost money. Australian parents spend an average of $50,000 per child on education and childcare, so if your intention is to save money for your kids you had better make sure you start planning early and take it seriously.

For many parents, when they think about how to save money for their kids, they are thinking first of all how to make certain their future educational needs are taken care of. Putting money aside as a deposit for their first car or a down payment on a property may not be the top priority.

The best approach is to start to save money early. Preferably while the kid is still in the womb. Every extra month you have to put money aside, the easier it will be to provide for those expenses which most certainly will be heading your way – and quicker than you think. You more you can save now, the less you may have to borrow in future years. In that way you save money two ways: You receive interest on the money you are saving, and you avoid paying (as much) interest on any future loan. Only 40% of parents save money for their kids’ education in advance, but even then nearly all parents admit that their savings fall short of the mark. Half of these savers put less than $100 a month aside.

Putting money under the child’s name is not the best way to save money for the future. The tax office applies high rates of tax to more than minimal “income” going into kids’ accounts that the parents say has been earned by the kids themselves. Equally, you never know what the kid may decide to do with their money once they reach eighteen and it becomes theirs to do with as they please.

It may be a better option to keep the money in the parent’s name and in trust for the child. This way it will incur tax at the parent’s own marginal tax rate.

Save money with an education saving plan

If specifically saving for educational purposes, you may want to look at an education savings plan. This is a tax-efficient way to save money for future educational needs, but the fees for these plans can be high, and you need to know how your investment will be treated if you decide to withdraw the funds early.

Overall, you must give yourself plenty of time when looking to save money for your kids. Saving needs to start as early as possible, and you must do plenty of research to discover the best methods of savings, or talk to a financial advisor who has all this information on tap.

Related posts:

1. How To Educate Your Kids About Credit Cards
2. How To Budget And Save Money
3. Guide: How Much Money Should You Save to Avoid Financial Disaster?
4. 10 Ways To Save More Money In 2010
5. How To Save Money This Valentines Day
6. Planning To Have A Baby: Prepare Your Finances And Save Money
7. Discussing Credit Cards with Kids

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