Should I Save Money for my Child?

If you have children then you might consider saving up money for their future. There are some parents that choose to do this but there are also some that choose not to. It is good to think about the advantages and disadvantages of doing this so that you can decide whether it is something that you want to do.

Advantages

All saving up can be beneficial in some ways. If you start putting a small amount of money aside for your child each month, then this will add up over the years. If you only allow them to have the money when they leave home then it should have added up to quite a sum. If you find a good savings account to put it in then it could also get interest on it and increase in value. You might even be better off investing it in shares or similar things as that is better for long term savings as it can give a better return than a standard savings account. Something like a managed trust fund should be pretty safe for keeping money in. It is worth investigating this carefully though as you do not want to take unnecessary risks with the money in case it gets lost. It is therefore worth taking a look at the options carefully or maybe even using a financial advisor to help you.

Even if you can only afford to save a small amount this will build up. It can make a big difference to your child if you save a little each month from when they are born. Once they are ready to leave home there may be enough money to be able to help them out with buying a car, a deposit on a home or university fees. It can feel good being able to help them out for the future.

Disadvantages

It is worth making sure that you think about whether this will be a good idea or not. If you are often short of money, then you do not want to have to borrow money so that you can put money aside for them. This will cost you a lot of money, in interest and fees for the loan and you need to think about whether you are prepared to pay out that money.

If you save money for your children and then give it to them then it might give them the wrong impression about money. They may feel that it is okay to be give money and not work for it. They might expect you to continue to help them out financially in the future. You might be happy to help them out as much as you can, but this could cause problems. Firstly, you may not be able to afford to help them out all of the time and so this might just not be possible. You may also find that you can only help them out until you run out of money and then they will have to manage on their own and they might just not know how to do this because they are just used to be given hand outs whenever they need them. It could be better to encourage a good work ethic instead where they are taught how to earn money and be independent of you so that they will never have to rely on others for money. If you do rely on others then you can get really stuck when that source of income disappears. So much better to be able to manage on your own and therefore not have to worry about whether the person you are relying on for help will get into the situation where they will not be able to help you any more.

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