It’s hard to imagine the future when you are living in the moment. With kids, time flies by so quickly, and before you know it – as old ladies we bump into in the bus queue love to remind me – they are young adults ready to fly the nest.
I spend what already seems like a lifetime teaching my kids the difference between right and wrong, teaching them the ways of the world, encouraging them to work hard at school, helping them find their own interests, to be happy and trying to get them to remember their manners.
What I don’t always find time to plan for is their financial futures. When they are still jumping into your arms at every opportunity, it’s hard to imagine them finding their own way in life, leaving for university, buying their first home or even preparing for a family of their own.
I know I will never stop being a parent, no matter what age my children are, if I am anything to go by, they will almost certainly rely on us financially in some way or other. It’s important to start putting money aside for their futures from a young age, helping them to understand the importance of being financially responsible and, when they get slightly older, helping them to build a steady credit score so that they are able to take their first steps into adult life independently, without financial worries. The CreditExpert website is a good place to start with young adults, as it will enable them to firstly see how their decisions impact their credit rating and secondly allow them to manage their credit profile in the future.
I am conscious of planning for my children’s futures, ensuring that they are able to manage money effectively, understand the importance of paying bills on time, and most importantly, valuing every last penny that comes into their pockets. It’s not always easy when you are juggling the here and now though too.
So I thought I would put together a helpful list of tips and advice on how you can help your children save for their future, and optimise investment for those important milestones in life that will come around before you know it.
Open a child savings account
It might seem self-explanatory, but you’ll be amazed at how many parents simply forget to set up a trust fund or bank account on behalf of their children.
Over the years, it’s highly likely that hundreds, if not thousands, of pounds will go through your children’s fingertips. Whether that’s pocket money, birthday or Christmas money or even inheritance, children should be encouraged to save from an early age.
Adopting good money habits early on will set them on good stead for their future. It’s okay to make a few little mistakes too – learning how to manage and spend money appropriately is part and parcel of growing up.
There are countless banks and building societies that offer a number of benefits and high interest rates if you choose to open a child saving account with them.
There are a number of other investment options that you can explore when it comes to saving for your children’s futures.
Investing in Premium Bonds is a great way of keeping their funds safe and secure. The scheme, which is facilitated by the NS&I, allows you to purchase as many Premium Bonds as you like. Each bond is then entered into regular prize draws, and if you are picked, there are a number of small and large financial prizes on offer.
You must be aware though that you might not see a return on investment – it’s basically a game of luck.
Help your children to build their credit rating
As soon as people hear the words ‘credit card’, they are instantly put off, but the fact of the matter is, in all walks of life we need to prove that we can manage debt to be able to get more.
It might seem like bad advice, but 18 could actually be a good time to consider introducing them to credit and how to manage it effectively, rather than leaving them to fathom it out on their own at a later date.
Although they do have many disadvantages if not managed appropriately, they are one way of establishing a credit history and building your credit rating – factors that are paramount when it comes to purchasing high value items such as their first home or car, a computer for university or even their wedding.
On this note, even if you decide that now is not the time to introduce your child, or better still young adult to the world of credit, it is well worth explaining to them the concept of credit ratings and what they can mean if you find yourself with a poor credit score. If you’re not too sure of all the facts yourself (and let’s face it the ostrich position is an easy one to assume), you can find out more about your credit score online.
Image credit – a handful of pennies, Shutterstock.