Sometimes it can feel like you’re throwing your money down a black hole that happens to be wearing a onesie.
Clothes they quickly grow out of, astronomical child care and food to feed a teenager–hey, where did my money go?
But there are ways in which you can invest your money in your child and see a big return, and we’re not just talking about buying savings bonds.
While many of the things you want for your children may seem out of reach now (a $200,000 college education?) Trusting them to handle a credit card all by themselves? Getting them to finish their peas?), by making little investments now, you can get them where you want them to be, even while improving your own finances.
$20 for Cleaning Out the Garage
Studies show that giving an allowance can actually lead to lower financial literacy, lower levels of motivation and aversion to work.
We’ve come down on both sides of the issue of paying for chores, but most experts agree that paying children extra cash for tasks that go above and beyond their normal duties will help both you and them reap benefits later. Them, because they’ll have solid finances.
You, because you won’t need to bail them out or support them.
Source: Learnvest
$12-$60 for a Year of Girl or Boy Scouts
We like group activities because they encourage cooperation, learning and healthy habits. Girl Scouts is one of–if not the–most affordable activities available for young girls. But there’s another reason we love a membership: Girl Scout members now learn financial literacy skills as well.
Badges added to the roster in the latest overhaul include Money Counts, Money Manager, Philanthropist, Business Owner, Savvy Shopper, Budgeting, Comparison Shopping and Financing My Dreams.
Boy Scouts have similar merit badges in Entrepreneurship, American Business and Personal Management, which require them to save up for, budget and plan for a major purchase.
How much you pay for your own kid’s involvement with the Scouts will vary depending on where you live, but even at its highest price, it’s not too bad.
Source: LearnVest
A $200 Deposit in a 529 Plan
A 529 plan lets you save tax-free for your child’s college education. Because it’s an investment account, money you deposit will grow at about 7% a year over the years you’ll be saving. That means if you deposit just $200 when your child is 5 years old, by the time she heads to college, your money will have more than doubled, and she’ll have about $500 to pick up everything she needs. Think about what depositing $200 a month will yield over 18 years!
You might be wondering if it’s even worth saving for college at all, when it’s so darn expensive. Well, a college education is still the fastest ticket to the American Dream … unless your child is burdened with students loans.
According to FinAid.org, gift aid from the government, colleges and universities and private scholarships pays for only about a third of total college costs. And taking out loans to cover the rest is much more expensive than saving ahead of time. FinAid.org estimates that if, in the years before your child enrolls in college, you save $200 a month for ten years at 7% interest, your child would then have almost $35,000 to use.
But if you borrow the same amount at 6.8% interest and pay it back over ten years, you’ll be making payments of over $400 a month. $400 versus $200 a month. Which would you choose?
Source: LearnVest
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