Tips to Save Money for My Children

What is the best time to initiate money saving procedures for my child?

There are many pre-defined rules that must be considered before initiating money saving procedures for your toddler. Answering the query at hand – the sooner the better it is! Time is precious and with the passage of time, the cost of living is increasing rapidly. If you can initiate the investment procedures on this day, you might never have to repent on some other day in the future.  Here are some advantages of starting the procedure at an early stage:

  • The sooner you start, the skimpier will be the amounts required to save! Yes, this is true – if you are thinking about investing at a later date, you might have to spend more. The present economic condition of the country is grime, and I would never want to play with the future of my child.
  • The existing investment option, which is available in numerous forms, might not work out to be feasible later. Financial institutions are tightening their grip over their existing clients.

In what manner will my child’s college education cost me?

  • The cost is directly related to the type of college that is opted for the child. The fee’s structure of private colleges is always to the higher side. You might be able to find some respite, if you opt for state funded colleges. You will have to shell out approximately $34000 annually if you prefer private colleges. On the other hand, you will have to part away with just $14000 if you seek the aid of state education. In fact, the $34000 (mentioned above) is just an approximate cost – I have come across certain private colleges charging precisely $55000 per annum!
  • It is not a bright idea to fund the entire college education with your savings. The government has come up with certain financial aids to ease the financial burden. If possible, choose these grants because you will be able to procure $10200 for each year (if your child is attending a private college) and $3700 (if your child is attending a state-funded college). Bear in mind that these costs are merely approximated, and you will have to consider these costs to increase in the coming years. Okay, what is the approximate rate at which the cost might increase? Economists have put this rate at 7 percent by the year.

In what way should I start expending for my child’s college education?

Well, this delicate issue must be handed appropriately to realize the maximum benefits. One will have to consider the simple fact that investments might or might not grant you any returns. Hence, it is better to start investing with smaller amounts. Once you start realizing the profits, it is better to invest more into the same paradigm. In addition, there are no pre-defined rules that must be considered. Yet, I will be highlighting certain methods to be thought about if you are looking for realizing maximum profits.

  • Investing on bonds – If you are looking for a perfect investment solution, then this is the way to go.  Two types of bonds might materialize ahead of you; they are Series EE bonds and US Government bonds. I will be explaining these in depth in the following sections.
    • Firstly, we will consider Series EE bonds. Here are certain factors that must be considered while choosing to invest on these bonds. You will be provided with a fat interest rate according to the nature of bond opted and, the same interest amounts can be used as a whole (without any kind of taxes) for educational purposes. Bear in mind that the name of guardians must be placed in the bond.
    • Secondly, we will consider the US Government bonds. As I had mentioned earlier, this type of bonds works out to be highly feasible for funding the college education of your child. Keep a sharp look out for the date of maturation of the bond. It is better to withdraw the amounts once this maturation date is reached. Else, you will have to face significant losses. Unlike the previously mentioned bond, taxes will be charged for the amounts withdrawn through this system.

Various other investment schemes might also suit the discussion at hand. Opting for certificate of deposit or municipal bonds is also recommended.

  • Certificate of deposit – Most of us are already aware of this simple, yet efficient manner of moneymaking! The certificate of deposit (or a CD as it is commonly known in the financial circles) is analogous to a savings bank account. Interest rates will be added up to the existing amount, and you will be able to withdraw amounts at preset intervals.
  • Municipal bonds – If you are blessed with high-income levels (and if you happen to be paying ever higher income taxes), then this is the best manner to proceed with. One should have a clear understanding of the taxable and non-taxable amounts that will be bestowed to them at later stages.

Here is another method that is commonly practiced by many, these days. Well, I am speaking about the stock market returns. As with any other investment option, you must have ambient risk tolerance levels. If you are afraid of the included risks, it is better to opt for a mutual fund program. Bear in mind that it is going to take some time in order to realize the profits. Therefore, it is better to opt for a suitable program at an earlier date probably when the child is enjoying its first year!


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