Like any parent, you want your child to have the best of everything. You’re careful about what you’re feeding them, continuously replace the shoes they keep outgrowing, and monitor how well they’re doing in school. But you also need to be looking out for your child’s financial future by making smart decisions on their behalf.
One of the biggest mistakes parents make is assuming their child’s financial future will come together on its own, or that it can be taken care of when a child gets older. As a mom or dad, you can take a number of steps to look out for your child’s welfare.
Here are six things you should be doing to ensure your child has a bright financial future:
1. Skipping the Fancy Baby Products
Is the newborn stage too early to start teaching your child about fiscal responsibility? Maybe not. Splurging on a designer stroller won’t make a difference in the quality of your infant’s life, but it will put a dent in your wallet. Meanwhile, the money you could save by getting a less expensive (but equally safe) stroller could be invested in your child’s college savings account or a savings account like PSECU’s custodial account.
It’s okay to indulge from time to time. Just don’t make it an everyday thing. Your child needs to see you modeling fiscal responsibility from day one.
2. Purchasing Sensible Life Insurance
Life insurance is no one’s favorite topic. It can be scary and depressing to talk about. But you should consider getting life insurance to protect your child. If something happens to you, your child needs to have some sort of financial legacy from you.
This money can cover the cost of school activities, vacations, and other things you still want your child to have even if you’re not around. Or, in the long term, it could allow them to go to college, pay for the cost of a wedding, or put a down payment on their first home.
3. Opening a Custodial Savings Account for Your Child
Help get your child started out on the right foot financially. To do so, you may want to consider a custodial account for children under the age of 13. At PSECU, we currently offer a special higher-yield dividend rate for accounts opened for, or owned by, those under the age of 18. As with other PSECU savings accounts, a $5 deposit is needed to open the account. Then, the account can earn 1.00% Annual Percentage Yield (APY)* on up to $500 in the account. There is no fee to open the account and no monthly account fees.
Parents, guardians, or other family members over the age of 18 can open custodial accounts for a minor. The money in these custodial accounts belongs to the minor. However, the custodian makes the withdrawals and deposits.
4. Setting up an Educational Savings Account for a Child in PA
You can begin saving for your children’s education from day one by opening a Coverdell Education Savings Account. This account allows you to accrue interest and gradually build the amount you’ll need to pay for their continuing education. If you start early when your children are still in diapers, you’ll save a lot more than if you begin saving when they’re in high school.
Encourage your child to put some of their own money in this account, too. They should understand that education is a gift, and you will be happy to fund some of it, but they need to help out as well. You teach your children valuable lessons about paying their own way when you make them contribute.
5. Helping With the Financial Aid Process
Going to college costs much more than it did just 10 or 20 years ago. Your child will need assistance securing all the financial aid they can to pay for college, if they decide to go. Assisting them may include:
- Completing the federal forms together to ensure all information is correct. Errors can delay the process.
- Talking about what college you and your child can realistically afford. You don’t want your child to have their heart set on a place that is not financially feasible.
- Working together to find scholarships and grants to apply for in addition to student loans.
6. Teaching Your Child About Money
Providing for your children isn’t just about giving them money. It’s also about equipping them with the tools they need to save and spend wisely.
Use any opportunity to talk to your child about finances. A trip to the store to buy groceries, for instance, can become a lesson on budgeting. A much-coveted new gaming console can turn into a discussion about how to save for something over the long term. Teaching kids basics such as how to write a check and balance a checkbook can help them better manage their money, as well.
Are you ready to help your child learn the value of money? Open a custodial account at PSECU. You can deposit money into the account and teach your child about the ATM. Contact us today for more information on our youth savings accounts.
Take a look at our WalletWorks page for more tips on how to make sure your child has a bright financial future.