Kids are expensive. Every parent knows this. We aren’t just talking about the day to day expensiveness of kids—toys, clothing, etc. You want to make sure that when your baby birds leave the nest they aren’t shrouded in debt for their entire second decade (or longer).
- Set up a really good savings account. You want to find an account that offers a high interest rate. This way your money can earn money. The best savings accounts will offer you compound interest. This is where the interest earned on the account is added to the general balance of the account so that even more interest can be earned over time.
- Put the account in a trust that can only be accessed according to certain terms that you can set up with your lawyer and the bank (you can set up an account for yourself, too). You can decide that the only person to have access to the account is your son or daughter, but only once a certain age is reached or even if certain criteria are met. This makes it impossible for you to use the account for other things and prevents your kids from potentially taking the money you’ve worked so hard to save and blowing it on something frivolous as soon as they come of age.
If you really want the money you save up for your kids’ futures to do the most good, you have to add to the fund regularly over time. Don’t just deposit a lump sum now and hope for the best ten years down the line. Add money to the fund every week or month of your child’s life so that there is as much as possible available when the time comes to use it for its intended purpose (like funding a college education).