Are you a firm believer that everyone should work themselves for what they have? Or do you think this day in age things can be so difficult that a helping hand is the only way to get ahead? It’s a difficult one, especially as parents. We want to do right by our children, and finding the balance between handing them everything on a plate and letting them struggle through on their own can be a tricky one to get right. On the one hand, scraping through and overcoming obstacles teaches life lessons and makes you appreciate what you achieve all the more, but on the other, the financial world can be so difficult to navigate these days that all of the hard work in the world sometimes isn’t enough. If you want to give your child a helping hand, here are a few great reasons why it’s worth saving. If you start when they’re young, by the time they reach eighteen or twenty-one they will have a great nest egg to help with one of the following:
Education one of the main reasons many parents save for their children. Higher education is expensive, but it’s one of the very best ways you can improve your child’s prospects and generally give them a better chance of a prosperous and successful future. Along with fees, you have things like accommodation, books, living costs and more to take into consideration. Then they might want or need to go onto more education after that, for example, science based undergraduate degrees could lead to a master of science degrees or even a PhD. A medical degree is likely to then mean a large stint in medical school- the costs can really add up. College costs vary widely and if you’re on a lower income or in certain areas your child may be entitled to some financial aid when they come to start college. However, there’s always going to be some cost, so it’s worth having this money put away so it’s ready to be accessed if needed for your child’s education later on. It’s always better to have money in the bank than not have it available, and it’s always better to save than lend. Your savings shouldn’t affect your child’s entitlement to student aid, and you’re likely to always need to pay something anyway so be ready for this. If there is money leftover, it could always be used for something else.
Buying a House
It’s now harder to get a foot on the property ladder than ever before. House prices are going up, and mortgage lenders are demanding better credit ratings and higher deposit amounts, so it’s difficult for young people to achieve home ownership these days. Unfortunately, this can lead to getting stuck into a cycle of renting, once they move out of the family home to gain independence, saving while paying expensive rent is even more difficult. If you start saving early on, even having a few thousand to help them towards a mortgage deposit could help tremendously. You don’t need to feel as though you have to save for the entire thing, but a boost from the ‘bank of mom and dad’ can allow them to achieve this milestone. From there, they don’t have to waste money paying rent to someone else each month, every payment goes towards buying their property. Encouraging your child to start saving a portion of their wages as soon as they start work will help them to reach this goal more quickly, then with your help they can secure their first property.
Learning to Drive and Buying a Car
Having a car can open up a whole world of opportunities. Work, school, extracurricular and social activities will all be made easier for both you and your child if they’re able to drive themselves once they reach age sixteen. The cost of lessons, the purchase of the car and the initial costs needed can be expensive, so having some money put away for this is worthwhile. It’s a fantastic life skill, and over time their car insurance will decrease due to their experience on the roads so by the time they move out of the family home, it will be much more affordable for them. You save yourself having to run around giving lifts or prevent them from having to use unreliable public transport. It could be motivation for them to get a part-time job while they’re still in school to pay for it, this is useful as it gives them life experience and further independence.
Gap Year Travel
One of most people’s biggest regrets in life is that they didn't travel more when they had the chance. While of course, it’s possible to travel at any age and adjust the course of your life to allow this, it’s difficult for many. Education then work than family life later down the line are all very intense and time consuming, so taking a few months or a year out to indulge in this kind of thing are tricky. But travel is such a worthwhile experience and it’s not all about just having fun. It’s about seeing and appreciating the world, meeting new people, taking opportunities and learning. If you want your child to have this opportunity, you could save so they could take a gap year and experience all of this. They could go backpacking, volunteer abroad, visit some of the most spectacular places on Earth. These kinds of experiences really open up your eyes and give you a better understanding of who you are- things that will come in useful to your grown-up child throughout their life. This might sound like a very luxurious thing to save for, but it’s something that could definitely benefit them and shape them as a person for the better. Especially as this will be when your child has just finished highschool so won't have a full-time job or the ability to save for this themselves.
Start a Pension
Your child’s pension might be a long, long way off. But planning for it and saving for it now is a great, tax-efficient way to provide for them in the future. Even if you’re not around for it, your child will always be the most important person in your life and knowing that they’re looked after in old age can give you great peace of mind. Because pension savings are tied up until age fifty-five, you know that this money isn’t going to be dipped into, spent or wasted in their youth like a trust fund could be. It can provide great returns, although there are downsides too. For example, the age that a pension can be cashed out can be pushed back, and rises and falls in the market can affect the amount they will get. However, overall it’s a fantastic investment and is something that you can do as a parent.
Whatever you plan on saving for your child’s future, starting early and adding whatever you can afford to the ‘pot’ will quickly add up. This money can be incredibly helpful and give your grown-up child opportunities that they simply might not have had any other way. You can still encourage your children to work hard and appreciate all that they have while still giving them a helping hand when it comes to the bigger expenses in life.
Are you saving for your child’s future? What are you saving for?