Friday, January 4, 2008

How to Save Money for Children

Many parents are worried about how to save money for children and rightfully so. College costs are rising and more children are relying on their parents much later in life than they used to. Couple this with a Social Security program which doesn't seem like it's going to last, and parents are facing a bit of a conundrum.

Save for the kids or save for my retirement?

Of course, in an ideal world, you'd be able to do both and I do believe that this should be the goal that we're working towards. However, today I will only focus on saving money for your children.

Here are the steps you should take to save money for children:

1. Get organized. If your own finances aren't together, then it will be difficult to plan to save for your children. Start a file folder for your financial information and make sure that you know all of your accounts, where they are and what's in them.

2. Make a commitment. You don't have to commit to a lot. Just make a small commitment which will help your children in the future. For example, to start you may want to just set aside $50 per month. Or dedicate your coin jar to your children's savings. Any little bit will help and it all starts to add up. In the future, you will probably be able to save more.

3. Set up a separate account for your children. You do not have to allow them to have access to it and you don't even have to put their name on it initially. Just make sure that there is a separate place where their money is going. ING Direct offers a high interest rate and allows you to easily do this. Click here to sign up for ING Direct.(aff)

4. Set up a 529 plan. Whether you do this is up to you. A 529 plan allows your money to grow tax free. It is later to be used for college or other qualified educational expenses.

5. Join Upromise. Upromise is a great way to help save for college. When you have a Upromise account, it's linked to your credit cards. When you make a purchase through qualified stores, they give a percentage of money back. This money goes into a 529 plan for educational expenses. It's a great way to save, simply by spending money that you normally would spend. Click here to join Upromise.(aff)

I hope that this list of steps has helped you to understand how to save money for children. Do you have any additional ideas or tricks?


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