Are you looking for creative ways to secure your child's financial future? Three innovative saving strategies can help. Imagine a round-up savings system that effortlessly converts everyday purchases into contributions for a 529 plan. You could also consider employing your child in your family business, transforming their early work experiences into a thriving Roth IRA. For the bold, explore the exciting potential of investing in Bitcoin, a digital asset that has outperformed traditional investments.
Each method teaches valuable financial lessons and paves the way for substantial savings. Discover how to build a strong foundation for your child's future while making saving engaging and rewarding!
Creative Ways to Save for Your Child's Education
Implement Round-Up Savings System
I started saving for my child's college by creating a "round-up" savings system tied to everyday purchases. Every time I made a purchase, I set up an app to round up to the nearest dollar and automatically transfer that difference to a 529 plan. On average, this added $40 to $60 each month to the account without any major budgeting changes. Over 15 years, those small amounts can add up to more than $10,000, and the total can significantly increase with investment growth. I believe this approach worked because it was seamless and required little effort, making it easier to stick with the plan long-term.
For parents just beginning, I'd suggest finding a system that integrates easily with their daily routine, like using cashback from credit cards or apps to funnel additional savings. Automating contributions, even small ones, removes the mental barrier of remembering each month. In my case, tracking progress annually helped keep the momentum going, making the goal more achievable. Setting aside a portion of peak-season earnings or bonuses can make a big difference for parents who are contractors or small business owners, such as those we work with, to provide contractor bonds and insurance.
Michael Benoit, Founder and Insurance Expert, ContractorBond
Employ Child in Family Business
A great way to start saving money for your child's education and retirement is to use a family business to employ them and contribute their income to an IRA. There is a caveat that the employment must be real and performed by the child. A great example of this is when my son started to help with direct mail campaigns in kindergarten. He loved helping out, and applying stamps to the envelopes was almost fun. As he aged, he graduated to sealing the envelopes, stuffing them, and folding the letters.
The key consideration is that you must limit the activities to what your child can and does perform. The rate paid must be commensurate with a normal and reasonable rate. Direct mail labor was paid at the applicable minimum wage in this case. The biggest bang for your buck is to open a Roth IRA. Yes, you'll pay the "kiddie tax" at your applicable rate, but the "extra" compounding over the 10 years between the age of 6 and the normal working age of 16 will more than make up for the tax paid.
Invest in Bitcoin for College Savings
Becoming a new parent can be daunting. Along with new and unfamiliar responsibilities comes an array of new "big" purchases. Our family found it hard to save, especially at the beginning. But once the initial dust settled, I found it easier to budget and save.
In terms of saving for college, I researched several different investment vehicles and unique accounts. Accounts set up specifically for children, perhaps that they cannot touch until a certain age or can only use towards college tuition—all well and good and all serving a purpose, but one creative asset I would highly recommend putting at least a sliver into is Bitcoin.
As I was unfamiliar with investing in digital assets, dedicating just a small amount of capital towards Bitcoin forced me to learn how to buy and safely store the asset. Watching it grow has opened a whole new world of opportunities for other investments my husband and I now make. It's a great way to learn about this new asset class, and I can attest that it has outperformed every other investment I have used for our two young children.
Amy Johnson, Founder and Blogger, AmyBabys.com
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