A guide to saving for your kid’s future
From their first steps to their first home, your child’s future is going to be filled with countless milestones. Setting aside small amounts now will help them in the big moments as they head towards adulthood. Every dollar is a gift for their future.
Before you start saving for your child’s future, make sure you’re in a financial position to do so. Understanding your cashflow will make it easier to put money aside and enable you to support them long-term.
Get a clear picture of what’s coming in and going out of your bank account.
Pay off any outstanding high interest debts, or make sure they’re covered.
Set up an emergency fund to cover unexpected expenses like car repairs, medical bills, or a sudden job loss.
Figure out how you want to support your child. Focus on what’s important to you, them, and your family. Is it education, a move overseas, or a deposit for their first home? Or just simply starting them on their investing journey early? Knowing where to start will help you estimate how much you might need and when.
Make a list of milestones and estimate their costs.
Consider how long it’ll take to reach each milestone.
Think about how much you can afford and want to set aside for them.
Build saving into the rhythm of your life. Regularity is just as important as the amount you put towards a milestone.
Set up an automatic payment that aligns with your pay cycle.
Consider putting any gifts or extra cash into their savings.
Review your budget once a year to see if you can increase your contributions.
Engage your kids in age-appropriate chats about money. Make them a part of money discussions by talking openly about saving, spending, and giving. Modelling smart financial habits can give them the tools they need to create their own positive financial future.
Let them help with small money choices, like deciding what to save for.
If they have an investment account, start to talk to them about where their money is and how the value changes over time.
Celebrate achievements together, whether it's reaching a savings target or picking up a new money skill.
If you don’t need the money for a while, investing might be your best option. You’ll have more time for your money to grow. If you need the money sooner, stable, lower-risk options could be where you put your money.
Think about putting your money into diversified managed funds like the ones Tempo offers if you want to save longer term. Generally, these are expected to have higher returns over time, but are higher risk than cash, bonds, or term deposits.
Consider savings accounts or term deposits, if you think you’ll need your money in the short-term. Generally, these types of lower-risk investments provide more stability over the short term.
Save or invest at an amount that suits you – small amounts can add up over time with the power of compound interest.
Life changes, and so will your kids. One day they’ll want to go to uni, the next they’re planning a solo trip through the Amazonian rainforest. The fact you’re saving for them means you’ve already given them a leg up. Whatever happens, you’ve got their backs.
Check in regularly to see if your goal, or how you're saving needs to change.
Don't obsess about hitting a specific number.
Remember: every dollar is a gift for their future.
Putting money aside for your child is an act of love and foresight. Whether it’s for their education, independence, or any unexpected expenses that may arise, Tempo can help you get there. With the power of investing, you can put them on the path to success.
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