As a parent, you may want to contribute to your kids’ education or help them pay for major life milestones, such as a wedding or first home. Yet more than half of parents (52%) have little to no savings for their children’s future, a recent Greenlight survey found. And most parents (71%) worry about being able to support their children’s future life events.
If you’re in the majority of parents who have fallen behind on saving for their kids’ future, take these steps now to catch up.
Set Up a College Savings Fund ASAP
“College expenses are ever-increasing, so try to start setting aside some [money],” said Morgan Kennedy, a private client advisor at Bank of America Private Bank. “Whether it’s a bi-monthly draft from your checking account or you put bonuses into the plan, put that money aside for your child’s college fund.”
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Consider opening a 529 plan, an investment account that allows you to grow money in a tax-advantaged way to be used towards a beneficiary’s education.
“Set up monthly contributions to be automatically deducted from [your] checking account and deposited into the 529,” said Gina Grippo-Martinez, a wealth advisor with ALINE Wealth. “Every little bit helps, and the earlier you start the better. Challenge yourself to increase the contributions by 1% annually.”
Reevaluate Your Spending
The best way to be able to save more for your kids’ future is to spend less now.
“Having a budget is always something that’s important,” Kennedy said. “This will help you when it comes to seeing what you can potentially cut out so you can add to your savings. Something as simple as just writing down what you’re spending every two weeks and then sorting it out into categories will help give you a window into your spending, and then you can talk to your spouse, your partner, your family about where you can potentially cut back. Is it eating out? Is it travel? Is it [starting to] shop at discount stores so that you can save a little additional money?”
Streamline Your Savings Efforts
As busy moms and dads, it can be difficult to stay on top of savings goals. That’s why money-saving expert Andrea Woroch recommends automating your savings as much as possible. She recommends downloading money-saving browser extensions, like CouponCabin’s Sidekick tool.
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“It automatically adds coupons and cash back to your online cart, ensuring you never miss out on a deal,” Woroch said. “Meanwhile, Paribus tracks prices of items you purchase online that are linked to your email, and will request money back on your behalf in the event they detect a price drop on that purchase as long as it falls in the retailer’s price adjustment timeframe. Popcart is also a helpful browser tool, as it provides instant price comparison online so you don’t have to open multiple tabs and run several online searches.”
You can also use apps to streamline your investments.
“As far as investing goes, the micro-investing app Acorns is great because it has a feature in which they round up purchases made with your debit or credit card to the whole dollar and put the difference to your investments,” Woroch said. “I love that this is on autopilot because remembering to invest is often the biggest barrier to actually doing it for [parents] who are already juggling multiple things at once.”
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