Putting away some money for your children to use when they are starting out in life can make a big difference, ADEMOLA ALAWIYE writes
Saving for your children’s future is an ideal way to be prepared for their college expenses or other plans after high school. You can save for the future in numerous ways, but several options such as tax-advantaged accounts are better than others. By choosing the ideal way to save, you will ease the burden of being there for them financially after they graduate from the university.
Many parents are overwhelmed with the financial demands of their children. Some even find it hard to provide their basic needs – feeding, accommodation and clothing. When it comes to school fees and medical bills, they find themselves ‘forced’ to seek help.
But experts say with careful planning and a lot of saving, parents may find it easier to fulfil their obligations to their children. Of course, the economic situation in the country can make it difficult, but as long as you earn an income, experts say you can make your children’s future more secure with careful planning.
When it comes to providing for children, experts say the mistake many parents make is that they believe – without any guarantee – that when they get to that ‘bridge’ they will cross it.
What this means is that even when the times are good, there will be no thought spared for school fees as long as the baby is not ready to go to school yet; all that ‘matters’ for many parents are clothes and food. The extra cash, which could have been kept for the child’s future, may end up being spent on changing a car that doesn’t need to be replaced.
Many parents, who plan ahead – some start saving even before the child is born – may find that by the time the child is ready to go to school, they don’t even have to touch their salary to make that happen.
Those who do not, believing that they will handle ‘it’ when the time comes, may find that they are going through a bad spell and will, therefore, be unable to fulfil their obligation.
To ensure you don’t go into debt or risk financial ruin in raising your children, there are many steps you can take. From opening trust funds to making investments in your kids’ names, some of the steps you can take are highlighted below.
No matter your present situation, experts say the time to start is now.
Institutional options
There are many banks, insurance companies and financial institutions that have savings packages that enable you to save towards your children’s future. These institutions have packages for health bills, primary, secondary and tertiary education, among other packages. Experts recommend that parents should find one that is suitable for them and start saving now for their children’s future.
In patronising these institutions, it is wise to consult financial experts to help you to draft a savings plan for your children’s future. The plan will then guide you in deciding the packages to patronise.
Besides the institutional options, other steps you could take to boost your savings are explained below.
Let family members participate
Many people have relatives who are willing to and occasionally send cash donations to their children. Some family members will even offer to take care of an aspect of their needs such as primary school education. Experts say it is okay to encourage such people to jointly operate a savings account with you for that purpose. Instead of providing your account number so that they can send in money for the purpose, you can open a joint savings account with them for that purpose. You may be surprised at how often they deposit ‘lose’ cash into the account in their bid to ensure they keep their promise. By doing this, you also make the process of fulfilling that promise or commitment they made easier. This is because instead of waiting for the schools to resume before doling out a ‘large’ sum for the fees, the relative also has an opportunity to save for it gradually.
‘Monetise’ gifts
This is a bit tricky, but if you are asked which you prefer between having a child who has more toys and gifts than three children will require in two lifetimes and having a child whose education and needs are provided for, you are likely to chose the latter. This is why experts recommend that you could find a way to get some of your friends and relatives, who have made it a habit to send gifts at specific dates to put the money they intend to spend on that into an account for the child. Just as wedding registries are not common in Nigeria, experts admit that many parents will be uncomfortable with this option. This is why it is best to adopt it when dealing with very close friends and relatives.
Target scholarships
This is a very important step because most parents get to spend a fortune educating their children. With scholarships, some parents have been able to avoid spending a kobo for school fees, particularly university education. By targeting scholarships, parents can ease the burden of educating their children.
Experts say if parents pay proper attention to the education of their children, they might develop the intelligence required to win scholarships in the future, thereby saving their parents hundreds of thousands if not millions of naira.
If you have time for your family and, beyond lesson teachers, pay a close attention to the education of the children and if you can really push them, you might be surprised that they will do very well and win scholarships. The main thing is that there is a drive, a plan and taking concrete actions towards it.
Keep the loose change
Some people often find loose change in their pockets or homes. Experts say because lose change is money that has been forgotten and ignored, it doesn’t affect your budget. Therefore, they urge parents to develop the habit of saving every loose change they find for their children. You may assume that it won’t amount to much but saving N500 in loose change every month means you will save N6,000 in a year. In five years that is N30,000. This is aside your main saving plan for your child’s future.
Review your budget
Another step experts recommend that you take is to review your budget and remove one or two things you spend money on regularly. After doing this, you will then ensure that the amount you spend on those items is saved for your child. For instance, you could cancel your subscription for a magazine and transfer that money to your children’s savings account, by opting to read the magazine online. The idea is to work towards making some extra money available for your children’s future.
Get the kids to play a role
Involving your kids in your plan for their future is very important. Experts say once you make your children financially literate or provide appropriate financial training for them, the responsibility of providing for them becomes easier.
If your child wants to become a musician for instance, you could consider sending them to a school that is located close to a studio and encourage them to get a part-time job at the studio. This way, they get practical knowledge, earn an income, and get an education. That’s like killing three birds with one stone.
Copyright PUNCH.
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