Children are the pride and joy of their parents and can bring an unsurmountable amount of happiness into your life. However, raising a child can be a costly endeavour. Between the day-to-day expenses, school fees, after-school activities and ever-escalating tertiary education costs, the financial aspect of child-rearing can be a source of stress for many parents.
The good news is that there are ways to minimise this stress. Planning ahead will help you enjoy the moments in the present with less concern about the cost of the future.
When I was little, I had a helicopter piggy bank with a spinning rotor and the mere act of dropping the money into it proved exciting, even if it was just 10 cents. No matter the age, there are several ways you can teach your child to save. From piggy banks to setting aside money from an after-school job, it is never too early nor too late to start your child’s saving journey.
Opening a savings account for your child is a great way to contribute save for your child while simultaneously teaching them how to save. Together, both parent and child can work together to grow savings and ensure better financial stability.
Set aside a portion of your child’s pocket money and deposit it into their savings account instead. This will enable the money to grow alongside your child through interest earned. On top of that, encourage your child to deposit their own money into the account as well. Be it gifted (in the form of ang paos for example), or earned through part-time work or chores, making these deposits will teach them to plan ahead and understand the value of money.
Investments typically offer a greater variety in their returns but require a little more effort to maintain than savings accounts. There are also different types of investments depending on the duration of the desired investment period, and the amount of risk you are willing to take. For example, stocks are typically more volatile so their value can fluctuate significantly within a short period of time. With proper management, stocks can be good short-term investments to help your money grow for your child’s future.
On the other hand, bonds are a safer alternative to investments than stocks. A bond essentially represents a loan between you the investor, and the borrower, who may be the government or a corporation. After a given period, the bond issuer pays back the principal amount as well as the interest that was set at a predetermined rate.
A child investment plan combines the benefits of investments with insurance. The investment component works to accumulate money for your child’s future financial needs through investing in the funds that the insurers provide. A regular premium investment-linked plan, for example, amplifies long-term earning potential and magnifies your wealth. This shows that in the unfortunate event of a parent passing, your child will be financially taken care of with a fixed payment at regular time periods. This plan is rather flexible as you can customise your plan as you grow it – for example, you can opt for partial withdrawal when there is a need to, reduce or increase the premium to suit your current financial background, and other benefits.
It seems only logical that the amount of time you spend saving will directly impact the total amount saved. However, the rewards of time extend beyond that. Starting early also enables you to make more manageable contributions towards your child’s future. While it may seem strange to begin saving for your child’s future when they are still small, time is certainly your friend when it comes to saving up for your kids.
If you have read this, you have already taken the first step to ensuring a better financial future for your child. However, making the decisions that are to come with future financial planning can still be difficult and overwhelming at times.
In those moments, our financial consultants at SG Alliance are more than happy to provide you with our advice. We understand family priorities and finances – after all, many of our consultants are parents themselves. Using our expertise, we will tailor a plan suited to your family’s circumstances, needs and priorities, giving you peace of mind so that you can enjoy the now with your family.
Retirement to me means these three things all at once: • no longer having to work for a living •