Savings for a kid is a major “Need” for parents. Early savings helps them to get enough finance for the future requirements of their kid for higher study, marriage etc.. Here are 5 well researched practical tips for parents to save money for kid as well as build a savings habit to their kid.
o Present her a cute piggy bank: Present her a small piggy bank to start collecting and putting coins into it. The ideal age to start such is 2 years. This will give her a habit of collecting coins if she saw sitting somewhere. You can give small currency notes as well. Give coins and currencies regularly. This will make her savings habit.
o Open a savings bank account in her name: This is for depositing the money she is collecting using her piggy bank. You can take her to the bank when depositing the money as well. Let her have awareness of bank deals. A required care is, select an account that have compounding interest as well as lock in period for 15 years or more. Or you will tempt to take money from this account when small requirements arise. A classic approach is, add little amount in it when you have happy moments in your family.
o Start a SIP (Systematic Investment Plan) with an index fund: Have a monthly contribution of minimum amount with a good Index fund subscription. Subscribe it as long as possible using Systematic Investment Plan (SIP) or using Dollar Cost Average (DCA) method. This will not only give the benefit of growing your money with economy and compounding basis but also, will be enough to meet all her future requirements.
o Open a trading account: Open a trading account in her name and buy shares of one company in a year. Try to buy the companies using the Buffett theory by identifying the golden stocks from various companies. Hold the same for long years. This is a best option to grow the money along with your kid grows.
o Apply for a children’s ULIP: This is a best approach to have a long term investment profit. Apply for a good children’s Unit Linked Insurance Plan by considering its low costs, high fund performance etc. Always start ULIP with waiver options to ensure the premiums will not stop in case of any sudden demise of her parents. If you select this option, company will pay the rest premium from the time of the death of parent who is the guardian for kid.
I am sure the above points will work better than any other plan you decided to have for your kid.Please comment to let me know if you have any other better ideas that you required me to add with this article. Through your comment, I can understand the acceptance of these ideas. Please do it as much as possible and without any hesitations.You also welcome to start a discussion on this article if willing.