Saturday, February 11, 2006

Saving for your Baby

By Rebecca VanGinkel

When your first child is born, you get caught up in the present, and don't think very much about the future. You worry about day to day needs like feeding your child, dressing him, keeping him from getting sick, and so on. After you get caught up and get into a good routine, you might want to start looking toward the future, for your child's sake. There are a few things every parent should try to achieve for their baby.

The first thing you can do is start a piggy bank for your baby. You can start by just putting spare change in a jar at the end of the day. Spare change adds up fast, and before you know it, you will have a lot of money saved for your baby's future.

Next, it is important to start a savings account in your baby's name. At most banks, you can start a saving account for any child under eighteen, without having to have a certain amount of money in it at all times. You can also usually make deposits of small amounts of money, so if your baby has a piggy bank, you can deposit the change each time its full, even if it's only three to five dollars. Some banks also offer special games and things for babies and young children. Wells Fargo, for one, offers paper money each time you or your child deposits money. After they collect a few dollars, they can start spending it on prizes. If they collect one hundred paper dollars, they can buy a fifty dollar savings bond, which will also help your baby in the future.

Savings bonds are also a good way to invest your money for your child. In most cases, you only pay half of what your savings bond is worth. My husband and I pay twenty five dollars for each fifty dollar savings bond that we buy for our son. Your baby will not be able to cash his bonds in until he is eighteen, or you can consent and let him, but the bond might not be matured to the full amount. In that case, you will not get the full fifty dollars. Savings bonds come in all different amounts, not just fifty. They also take a certain time to mature, and it is good to know when. It is better if you wait the full amount of time, so you get the most for your money.

Another thing you might want to look into is starting a college bank account for your baby. Every year, college gets more and more expensive. You want your child to be ready for the future, and if that means starting two savings accounts for your child, it might be something you want to look into. In a regular savings account, you can make withdraws whenever you would like. In a college savings account, you want to let the money sit and add up interest. It is not ideal to take money out of a college account, for anything except college. If you save throughout your baby's life, when it is time for him to go to college, you will not have to worry about coming up with a big chunk of money, or taking out a loan.

When your child starts getting older, and understands money and its value, you may want to start thinking about giving him an allowance. Only give your child an allowance if he does his chores. If he does not do his chores, only give him a part of his allowance. This will teach him to respect you, and he will learn that he has to work for his money. It is a good idea to tell your child that he can keep half his money for things he wants to buy, and put the other half in his savings account. You can also let your child give a small amount of his allowance to a charity of his choice. He will feel good about knowing he has helped someone else in need. By letting him spend and save his own money, he will learn a great life lesson. As your child becomes an adult, he will understand the value of money better, be a better saver, and not spend his money on frivolous things.

Your baby's future is in your hands, and you can start making good financial decisions for him right now. You will feel great knowing that your child is financially set for his teen and college years.

No comments: