Saving Money For Kids

When your child moves away from home for the first time, there’s a pretty good chance that they’re going to get sticker shock when it comes to how much everything costs. They will now be responsible for paying for their own rent, their own food, transportation, and most everything else in their life. Before leaving home, it’s very likely that you were providing these things for your child.

Ideally, you’ve taught your child all about the different financial expectations before they’ve left home, but there’s still bound to be things that they hadn’t thought about. They are also unlikely to have any type of emergency fund if something goes wrong. They’ll either have to come to your or else put it on a credit card. Credit cards are less than ideal as they’ll still have to pay those expenses later.

If you’re financially able, try to save a little bit of money for your kids for when they leave your home. This doesn’t mean that you simply will hand your child a stack of bills when they move out, but rather you’ll have it available to help support them if needed. This doesn’t have to be a huge amount of money, but if you have a few thousand dollars in an account set aside for them, then you’ll be able to help when and if they need it.

Of course, many families won’t be able to accomplish this. If you can’t, you’re not alone. Billions of kids have made it through living on their own without financial support from their parents, and your child can do the same. Having a bit of cushion simply makes it a bit easier on your kids (and you).

One of the best ways to save money for your child is to use a 529 Plan. This is a specialized account that allows for saving money towards education and other expenses. You’re able to put money in which will grow over time (it’s an investment account). Your child will then have access to that money when they go to higher education. The money can also be used for other purposes as well, and the money can be withdrawn (although it will be taxed if not used for the approved purposes).

Ultimately, the amount of money that you save is not the top priority. If you’re not already putting money away for your own retirement, you should be prioritizing that first. While having some money for your child would be nice, you also need money for yourself when you’re unable to work. If you don’t, then your child will be responsible for their own expenses, as well as yours at that age.

If you’re able to save a little bit of money for your child after they leave the home, do so while you can. Every little bit will help both of you as they move out into the world. If you end up not using it for them, you may have a little bit of extra money for yourself or that you can use to spoil them in some other way down the road.