7 of the Best Ways to Save Money For Your Kids Future
Blog Highlights:
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Kids Savings Accounts, Money Markets, and Share Certificates (CDs) provide children and parents with interest-bearing savings opportunities.
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Minors who learn how to handle finances appropriately will know how to gain access to borrowing options when they come of age and build credit quickly.
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Families need to start planning now for major expenses, such as four years of college.
Parents and caregivers continue to wrestle over the best way to save money for kids. In the blink of an eye, toddlers become teenagers, graduate high school, and go-to college or trade school. Their growth and success require love, kindness, and financial support. If you are concerned about having enough money set aside for major life expenses such as tuition, these are some of the best ways to save money.
How to Save Money for Your Kids & Why It Is Important
Children grow up quickly, and the need to have money ready for major expenses can take parents by surprise. As loving parents and family members, you don’t have to scramble to fund essential expenditures. These are ways to save money and prepare your child for the financial road ahead.
How to Save Money for Your Kids & Why it is Important
In Oklahoma, kids can get their first part-time job at 14, with some exceptions. At 14 and 15, youths need to obtain a work permit by filing an Employment Certificate of Age and Schooling form. The state exempts kids who work at family businesses, farms, or deliver newspapers. Outside of those wage-earning activities, there are plenty of informal side gigs that put cash in a kid’s pockets and give parents an opportunity to teach them smart ways to handle their earnings.
1. Teach Them Financial Literacy Skills
Learning financial literacy gives children and teens an opportunity to manage, budget, and invest money in a way that sets them up for future financial success. Kids who learn how to make smart decisions are better equipped to maintain a healthy savings account balance, build a robust FICO score, and be prepared to be financially independent sooner. By teaching children and teens financial literacy skills, parents, teachers, and mentors are setting up the next generation to avoid the mistakes we have all maybe had to learn on our own.
Why is Financial Literacy Important?
Starting young with financial literacy concepts provides numerous benefits to children and teens that can have a lasting impact on a child’s financial future. Early exposure to financial literacy helps children understand the value of money, how it is earned, and how it can be managed. Teaching children about saving for goals, such as a desired toy or a future event, helps them understand the importance of setting and working towards financial goals. This skill translates into better planning and goal-setting in adulthood. Starting early with financial literacy helps kids build good money habits and gives them the skills they need for a stable and successful future.
2. Kids Savings Account
The best way to save money for kids 13 years old and under is for parents to encourage children to open and utilize a Kids Savings Account. A youth savings account teaches children many skills and some even offer a quarterly dividend teaching children the valuable lesson of interest. When children see their funds increase due to interest, it opens the door to further discussions about the value of investing.
Allegiance understands that a Youth Savings Account can set your child(ren) up for success. If you have a child or grandchild ages 0-13, take the first step in teaching them how to be responsible savers by opening an Allegiance Youth Savings Account today. They will automatically become part of the Soaring Eagle Saver Club and receive a free gift with every deposit they make.
Allegiance also offers Teen Checking that comes with a free debit card. They have the ability to access their accounts through Online and Mobile Banking and learn the fundamentals of money management. Guardians and teens can set up text alerts for purchases, low balance alerts, alerts for large deposits, etc.
3. Money Market
While a youth savings account is a great option for children who are learning to save, a Money Market Account is a great option for adults looking to save money for their child(ren). With typically higher interest rates than your average savings account, you’ll earn more money on your hard-earned savings. This tiered option helps you get rewarded more for higher savings totals while enjoying no penalty when it comes time to withdraw money.
4. Certificates (CDs)
A Certificate of Deposit, Share Certificate, or CD, is another type of savings account that offers strong interest rates. These federally insured, high-reward investments require people to leave the money in an account for a set period of time. Once a certificate reaches its maturity date, you can withdraw the money and walk away with a nice return on your investment. Need to use your funds before the maturity date? Be prepared to pay a small penalty. Parents who want to grow their resources to purchase their child a first automobile or pay for college tuition may find certificates very useful.
Certificates are a great option for your children as well once their youth savings account balance reaches the minimum deposit requirement which can be around a reasonable $500.
5. 529
A 529 account is a type of state-sponsored college savings plan that allows parents to withdraw money to pay for tuition and other educational expenses. Some programs provide state and federal tax benefits and let you take out as-needed funds without incurring penalties. Speak with a tax advisor if you're interested in learning more.
6. Trust
Putting financial resources in trust is one of the best ways to save money for kids. A trust is an entity that can be created for the purpose of benefiting children. The assets are legally insulated from creditors and other issues. By placing money, real estate, or other valuables in a trust, the resources will be available when they are needed.
7. UTMA or UGMA Account
A Uniform Transfers to Minors Act (UTMA) account lets parents and other loved ones invest money on behalf of minors. Similarly, the Uniform Gifts to Minors Act (UGMA) allows adults to place money in an account for the benefit of minors. In both cases, a custodian oversees the accounts that are actually owned by the minor. The custodian can approve withdrawals for reasonable expenses until the child reaches the age of majority. At age 18, it can be withdrawn at the owner’s discretion.
How Can Kids Save Money?
Saving money and early financial literacy lessons go hand in hand. Parents who discuss family finances openly take the mystery out of money management and its value. Along with dinner-table talks about priorities and budgeting, consider taking the next steps by helping kids accomplish the following at a young age.
Open a Kids Savings Account
Developing regular savings habits, learning financial responsibility, and taking advantage of quarterly dividends, are just a few benefits of having your own Youth Savings Account. Open your child’s account with Allegiance today in-person at one of our branch locations or via Video Banking at your convenience.
Learn Good Money Management Habits
Money management habits start by educating children about the difference between needs and wants. Take the time to show them how your finances are used, paying for living expenses, savings, and other necessities before leisure items. Children who learn effective money management habits tend to practice frugality as adults. Allegiance offers free financial coaching to help guide you and your children manage your personal finances and create positive habits.
Earn Extra Money
Perhaps the best way to save money for kids is to teach them a strong work ethic and encourage them to practice sound financial literacy skills. Although the minimum employment age in Oklahoma is 14, with some exceptions, there are plenty of ways to earn cash. For example, mowing lawns, babysitting, raking leaves, and providing other services can earn kids the extra money they need to grow their savings account balance.
Apply For Scholarships and Grants
As high school graduation nears, college or trade school costs can seem prohibitive. Along with federal grants, there are a variety of in-state scholarships available. Some are based on academic achievement, while others are in place to encourage specific college majors. Don’t hesitate to speak to a guidance counselor or admissions professional about scholarships and grant opportunities.
Learn Good Credit Habits
There are ways to position minors to build good credit scores before they turn 18 years old. Establishing cell phone accounts, online subscriptions, and adding them to a parent’s credit card account are ways to start establishing credit. When they come of age, they could be ready for a credit builder loan that helps with building credit.
How Much To Save For College
The average cost of in-state tuition during the 2023-2024 term was under $10,000 in Oklahoma. Private institutions generally charge more. Food and housing expenses ran around $14,000 annually. That means the parents and children need to put away about $24,000 per year and account for inflation. All told, a bachelor’s degree requires an investment of about $100,000. Start saving today with a mix of the account options above to ensure college won’t turn into a burden for you or your child(ren).
Allegiance Can Help You and Your Child Save Money
At Allegiance, we understand that personal money management can be a challenge. We are ready to help our members, young and older, get closer to their financial goals by providing savings accounts, Teen Checking, and free financial resources.