It is always a smart idea to teach your kids about saving and investing as early as possible. You give your child the greatest chance at financial success by starting them off while they are still young. It is pretty easy if your use the following tips to execute a financial plan for your child. The following is a guest post by Lisa Cintron.
At a time when economic worries have everyone scrambling for financial security, the thought of investing in your child’s retirement may seem absurd. Or does it?
In the past, even a single generation ago, people could rely on Social Security and pensions to get them through retirement. The people who made investments coasted through their retirement, but that was then. Now, facing a job market that no longer offers pensions and a Social Security system on the verge of bankruptcy, people know they must initiate their retirement planning much sooner than every before. Helping your children begin a life of saving and investing in their future is something every parent must do. Simple steps can be followed to make this change in saving habits much easier.
* Start a mutual fund for your child(ren). After the initial investment most mutual funds will allow you to contribute as little as $50 dollars each time you make a deposit. Encourage friends and relatives to make contributions in lieu of large gifts. Require your children to invest a portion of any gift money they receive.
* Reduce amount of money that is used to purchase gifts during the holidays. By investing half the amount you would spend on toys that are soon forgotten. you will be able to amass a substantial retirement account for your children.
* Make deposits automatically. When you have deposits automatically withdrawn from your bank accounts it is easier to manage your money.
* Live beneath your means. This is crucial for saving for your own, and your child’ s futures. You cannot save anything if you spend it all.
* Use tax credit wisely. Every child age 17 and under receives a $1000 tax credit from the federal government. Dedicate this credit to the mutual fund each year, regardless of any other plans you may have for your refund.
* Take advantage of tax deferred state plans. Many states offer tax exempt or tax deferred programs for minors.
Investing one hundred dollars a month over the course of forty years will generate over a million dollars in savings. If the savings begin when the child is quite small, the investment value is sure to exceed the million dollar mark before retirement age.
By making it a habit to invest into your child’s future, they will also learn to invest. It is imperative to instill into today’s child that they are responsible for their future, and every action must reflect that responsibility.