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Unless you’re a parent in a Roald Dahl novel, you probably want the best for your kid(s).

From a competitive education right through to milestones later in life like weddings, or their first car, things don’t come cheap.

The reality is that despite your best intentions when you’re imagining your child’s future, kids are expensive.

Unforeseen medical bills, clothing, afterschool activities, daycare, rising school fees, and the like have the potential to put a serious dent your bank account.

That’s why you have to be smart about saving, and it never hurts to have a few helpful tips to make use of.

These tips below, outlined by News24, are a good starting point.

Teach children to invest in their futures

Open a bank account in your child’s name (it will make it easier to hand funds over to them when they’re older).

For birthdays and other gift-giving celebrations, encourage relatives to deposit cash into the account so that it can grow and collect interest.

To invest, here are the accounts that you should look into:

• Tax-free savings account: A tax-free savings account is one of the best ways to invest for your kids. It allows you to set money aside and watch the investment grow completely tax-free and, when you withdraw the accumulated funds, there will be no interest, dividends and capital gains tax levied against you.
• Exchange-traded funds: Listed investment products that track the performance of a group or “basket” of shares, bonds or commodities are exchange-traded funds. This means that they simply track an index.
• Education policies: At the end of the day an education policy is really an endowment policy. Endowments are policy contracts that commit you to a minimum investment period of five years.

Start Early

As soon as you’ve picked out a name and signed that birth certificate, it’s ‘go time’. The earlier you start investing, the higher your returns will be.

If you’re unsure how or where to start, or you’d like to hand things over to a professional, Consequence Private Wealth is available to assist with advice for those who want to get their financial affairs in order.

You can drop them an email at info@consequence.co.za, to set the wheels in motion.

Stay Consistent

You need to take into account the “three C’s”:

• Contribution: How much do you want to contribute?
• Consistency: How often will you contribute?
• Costs: Make sure your investment vehicle does not have exorbitant costs associated with it.

You don’t have to invest huge amounts, either. If you invest R500 from the time your child is one, and you earn interest at a rate of 8% for 17 years, by the time they reach 18, your investment will be roughly R211 173.

Every little bit helps.

There’s no time like the present, and it’s always a good idea to sit down with an expert, even if just for a once-off consultation.

[source:news24]