Unsure about how to save for your teenage child’s future? Here are six fantastic things you can do to save as much as possible.
Among planning various crucial aspects of your finances like your retirement, saving enough for your child’s future is indispensable as well. These exclusive savings for your child’s future must be sufficient for all the major events of their life, like higher education.
Like every other goal, while saving for your child’s future you also need to keep inflation in mind. That’s precisely why just putting some money aside in a normal Savings Account won’t do any good in the future. You need to look at ways that help your money grow so that it can support the ever-growing aspirations of your child.
Additional Reading: How To Help Your Children Understand Budgeting
To help you with that, we have a list of six simple and kickass ways to save. Let’s understand each one of them.
Setting The Right Goals
Since you’re planning ahead for your child’s future, you need to keep their short and long-term goals in mind. This might involve having a heart-to-heart with them and understanding what their aims and dreams are. Accordingly, you can look at different ways to save.
Apart from understanding your child’s goals, it’s also crucial to lay down a few for yourself. You have to be reasonable all the time. Setting unrealistic goals is only going to destroy your mental peace. Cut yourself some slack and be thoughtful. Preferably both at the same time.
Additional Reading: 12 Personal Finance Tips For Your College-Going Child
Aim For The Target
Once you have a definite list of goals, sit down and calculate how much you need to allocate for each. It will make it easier for you to plan things. Having a fixed target in place can make the way you save more efficient and also help you stay focused. While setting a target, don’t forget to keep all types of expenses in mind. These must include the basics like food, lodging etc. and also have enough margin for an emergency.
The biggest mistake most people do is—they forget to save for unforeseen circumstances. Such situations can cause a lot of trouble later. If you don’t have enough saved for an emergency, you’ll naturally end up exhausting what you saved for other stuff.
Additional Reading: 7 Important Questions To Ask Yourself Before Dipping Into Your Emergency Fund
Don’t Wait! Start Early
Instead of waiting for your kids to grow up, start saving as early as possible. This will help you in the long run. You’ll not only be able to save more, you’ll also have your mental peace intact. If you keep delaying it, it may create a lot of chaos in your life later on.
If you want to beat your saving targets, saving as early as you can is the right way of doing things.
Use The Right Saving Instruments
You can’t get your savings game right unless you start using the right instruments. You must know what will suit you the most. If Fixed Deposits make the most sense for your friend, they might not necessarily work for you. Choosing the right place to invest your money is crucial. You can decide that based on your short and long-term goals.
Since in this case, your primary concern is your child’s financial security, you can think long-term. Investing equities is one way to go about it. Don’t worry! Equities can be a little risky if you’re only investing for a short period but in case of a long-term plan, they make more sense and are very safe as well. If you’re unsure, talk to someone who can help you out with this.
Additional Reading: Equity Income Funds: Watch Your Money Grow Safely
Plan Your Portfolio
If you’re planning to invest in Mutual Funds, you need to balance your portfolio such that a sudden decline in the market won’t affect you too much. That’s when you can look at diversifying your portfolio. It simply means dividing your investments into different sectors like oil, banking, pharmaceuticals etc.
In case a certain sector gets hit, at least the other shares might get you decent returns. That way the blow gets softened and you don’t lose all your hard-earned money.
Take Baby Steps
If you have decided to invest in the stock market, don’t rush. If you’re a newbie, take your time to understand how it works. Instead of investing a huge amount, go for Systematic Investment Plans (SIPs). That can help reduce the risk involved.
Once you follow these methods, saving for your child’s future is a cakewalk. Past…don’t forget to save for yourself as well. Try the well-tried and conventional way—Fixed Deposits.