Like any parent, you want your child to have the best of everything. You make sure they’re eating well, have the best education possible, and excel at something they’re passionate about. But you also need to be looking out for your child’s financial future. Making smart decisions on their behalf now will set them up to be in a healthy financial situation in the years to come.
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 when they’re young to look out for your child’s future financial welfare.
Here are six things you should be doing to ensure your child has a bright financial future:
Is the newborn stage too early to start teaching your child about fiscal responsibility? We don’t think so! 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 our youth accounts.
It’s okay to indulge yourself with a few fancy items, just don’t make it an everyday thing. Your child will benefit from seeing you modeling fiscal responsibility from day one.
Life insurance is no one’s favorite topic. But, purchasing life insurance is one way you can help protect your child. If something happens to you, a life insurance policy can ensure that your child will have a financial legacy from you to help provide for their ongoing care.
This money can cover the cost of living that your child’s guardians will incur if you’re unfortunately 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.
Start your child 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. These accounts will earn a 1.00%* Annual Percentage Yield (APY) for balances of $5 to $500.00. For balances of $500.01 and over, the Regular Savings Share APY will apply. 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.
You can begin saving for your children’s education from day one by opening a savings account that’s specifically designed for education costs. There are two types: a Coverdell Education Savings Account or the more familiar 529 College Savings Plan. Both options allow for the accrual of interest on deposits and may offer tax incentives. Typically, Coverdell accounts are used for K-12 expenses and 529’s are for post-secondary education. Starting to save with either of these options means you and your child will have more financial options in the future.
Encourage your child to put some of their own money in this account, too! This will help them understand the importance of saving and will create a sense of ownership for them over their educational future.
The cost of higher education rises every year. Your child will need assistance securing all the financial aid they can to pay for post-secondary education, if they decide to go. Assisting them may include:
Providing for your child 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 time. 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 youth account for them. You can deposit money into the account and get your child started on the path to a lifetime of healthy financial habits and a bright financial future.
*To be eligible for the Youth Savings rate, the primary account owner must be under the age of 18. All eligible Youth Savings Share accounts earn 1.00% APY for balances of $.01 to $500.00. For balances of $500.01 and over, the Regular Savings Share APY will apply. Rates and information are subject to change at any time. Fees could reduce earnings on the account(s). The disclosed dividend rates are variable and may change after the member opens the account(s). Find our current dividend rates at psecu.com/rates. PSECU requires a $5 minimum balance to open and maintain a Regular share account. This $5 share account deposit is also required to be eligible to receive the Youth Savings rate, and the member must be in good standing as defined by PSECU's Bylaws, Article II, Section I. PSECU will make a $5 minimum share purchase on behalf of the member.