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Saving for Your Children’s Future

Posted by on January 24, 2009

Money Savvy Piggy Bank

There are countless magazine articles, self-help videos, and sites on the internet offering advice for how to save money for your children’s future. Educational savings accounts and the like can be helpful and are important topics that someone more knowledgeable than I can cover. The most important things, though, are simple and should precede and guide more complicated decisions. They are especially relevant in these times of economic uncertainty. Following these basic tips will help you save for your children’s future and teach them good habits by example at the same time.

Cultivate a strong work ethic. It can help with career advancement and increase earning potential. Besides, as much as you hate your job, slacking off doesn’t hurt just you. You have a family to support.

Pay attention to your finances. Use Quicken, Mint, Wesabe, a spreadsheet, a checkbook register – whatever it takes. The important thing is to keep track of money coming in and going out.

Curb your addictions. A cup of coffe or a pack of cigarettes may seem like a small purchase, but a few of those several days a week can be death by a thousand paper cuts. Once you start keeping track of how you spend your money, you’ll be surprised to learn how expensive that iTunes habit is.

Spend less than you earn. As simple as this idea is, amazingly few people follow it. Nevertheless, you’ll never save a dime for your kids if you can’t save for yourself.

Avoid bad debt. Credit cards aren’t magic money makers. You’ll have to pay the bills some day. If you don’t, you’ll destroy your credit. Good luck getting a low interest car loan after that. If you must use credit cards, such as to make purchases larger than your checking account can cover, at least pay it off each month. Carrying a debt just delays the inevitable. Worse yet, the compounding interest will put you deeper in debt.

There’s no such thing as a free lunch. If it seems too good to be true, it probably is. That interest-only, variable interest rate mortgage you thought would help you buy a house you shouldn’t be able to afford? Oops. Gambling in the hope of hitting the jackpot isn’t too bright, either. The house always wins.

Live simply. Do you really need that new ipod? a plasma TV (which uses oodles of electricity, by the way)? a video game system? an enormous, palacial house? I doubt it.

Used goods are your friend. Goods lose value the moment they’re bought. Unless aesthetics are a necessary part of something, think about buying it used, even if it’s less than perfect. Beat up books read just as well as new ones. Used clothes are just as good new if they’re not stained or torn. Used furniture can hold you up just as well as new. You get the idea. Get your nose out of the air and take it to the Salvation Army or Good Will. You’ll be surprised at the good stuff you can find if you have the patience to look, and you’ll save a fortune. Can’t handle that? Try craigslist. Even better, try Freecycle. Everything there is free. 🙂

Be charitable. A good way to learn to live simply is help those who would consider your simplicity luxury.

I’m sure I could say more, but I want to keep this as brief and simple as possible. The more I say, the less universal my advice is sure to become. I’m sure I’ll have more controversial things to say when it comes time to discuss allowances. 😉

If you’d like know what steps to take from here, check out The Motley Fool and Get Rich Slowly. Remember, you can’t expect your kids to respect the value of the dollar (what little is left) if you don’t. Lead by example.