You should consider a child savings account or buying bonds when planning for your child’s financial future. From the time we first become parents, of course we want the best for our children. We do everything we can take care of them responsibly. We feed, clothe and love them, and hope that they’ll grow up to be everything they can be, with full and active lives. However, if something should happen to us as parents, what would happen to our children? Life insurance is one way to help our children make sure they have what they need if the guardians we choose for them do not have the financial means to provide the life we want for them. Savings accounts and bonds offer a viable strategy regardless of your financial status.

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When you start to invest in your childs future this way, you do a number of beneficial things. First of all, you can begin to save money in your children’s names when they’re young by making regular deposits. They can also contribute funds to their own accounts, in the process learning how important and rewarding saving can be. This can help offset the cost of tuition for college as educational costs in the country skyrocket or for any other educational programs they might need in the future. However, unlike many college savings programs, funds in a child savings account do not have to be spent solely for education in the event, god forbid, they choose not to go to college. Money is available should there be an emergency, or for any other situation, without penalty for withdrawal. The money deposited in a child savings account is available to the child immediately.

Several financial institutions offer special accounts just for children, so finding one should not be a problem. But, finding the best child savings account that has a comparatively high interest rate will probably require a little homework. Not much though, you can easily compare financial institutions online with a click of the mouse. However, these accounts may include a requirement that an adult will be in charge of the money until the child reaches a certain age.

Another way to save money for your children’s future is to purchase bonds for them. Bonds hold the money you have initially invested for a set amount of time before they mature, so the interest rate on these is usually higher than a more flexible savings account. However, you shouldn’t put too much money away into these types of bonds unless you are prepared to have money in them for a long time. Usually, bonds must sit for about three years before they mature, and in many cases, much longer, before you can actually cash them in to receive full value.

Regardless of whether you decide on savings, purchasing bonds or both, you’ll create a financial cushion for your children’s future when they may need it most. This also gives you the peace of mind to know that your children will be taken care of long past your initial investments in them financially. With a little research for choosing the best one and regular deposits into a child savings account your kids financial foundation will be laid.

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A frequent topic of discussion among baby boomers is whether to save for retirement or pay for their kids’ college education.

You worked hard to raise your kids. You made sure that they had the right clothes, the cool shoes, and all the other “chachkas” they needed to fit in. You hope you did all the right things. Now, as your kids prepare to head off to college, you find yourself looking at anywhere from $20,000 to $45,000 a year (per kid) for tuition, room and board. Do you cash out your 401K to pay for their college? Or do you ask them to take out a loan?

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Part of the problem has to do with the fact that many Americans have negative savings. Not only did they fail to plan for their retirement, they also didn’t put away money for their children’s college, and they have no little or no personal savings. Another part has to do with the escalating cost of higher education.

It used to be that only those who went on to years of graduate school ended up with hefty student loans to pay off. However, it is not uncommon for today’s kids to graduate from college with a bachelor’s degree and a hundred thousand dollars of debt. This debt sits like a huge anchor on our children as they struggle to make the transition to fully independent adults.

For example, young adults in a serious relationship or engaged to be married must now consider how they will pay for their combined astronomical debt. And couples that have already married face a similar dilemma — if only one partner has a loan, should they be paying off that bill together?

There are no right or wrong answers for these issues, and every family has a different set of circumstances. However, the decisions you make will have far-reaching consequences for your lives and the lives of your children.

Think “In-State”

By no means do I claim to be an expert in this area, but my husband and I have embarked on a strategy that seems to be working well for our children and us.

Having four kids puts a real burden on any family’s finances. Having those kids very close in age is a recipe for financial disaster. As young parents, we couldn’t afford to save money for our kids’ college education, so we gambled on the idea that maybe two out of them would earn a scholarship of some sort.

By 8th grade, however, it became painfully evident that the scholarship strategy was not likely to pan out. Our kids were all loveable and smart, yet none had the innate drive, determination or IQ to attend Harvard or even a state college on a scholarship. As a result, we had to make some tough choices, and make them relatively quickly.

After studying our lifestyle and finances, we determined that with some sacrifices on our part and some help from our kids, we could put them through college without them having to obtain huge loans and mortgage their future. However, this required adopting some fairly stringent rules in regards to where they could attend college.

We started by explaining to our children that who they wanted to be and what they wanted to study was their choice. However, since mom and dad would be paying for the college education, the choice of school was ours.

Based on this rule, out-of-state schools were out of the question. We saw no reason to pay $30K a year more so our children could ski the Colorado Mountains. State schools in California were widely available and much more affordable.

Another option was to graduate high school at age 16 by taking a proficiency test and attend community college for two years. This would save at least $20K a year in tuition (even at a state school), and give them the ability to easily transfer to any state university of their choice. If they got accepted at a good university right after high school, we would have no problem paying the bill. Otherwise, it made more sense to attend community college for two years and then transfer rather than attend a mediocre college right out of high school.

Responsible Choices

The results are as follows.

Our oldest daughter applied and was accepted to UC Irvine right out of high school. She lived on campus for the first year and commuted the second year. For her third year, she transferred to UC San Diego, and will be a junior next year in her hometown. Our middle daughter, who recently turned 18, took the proficiency test at 16, completed her AA in a community college, and received an acceptance letter from all of the schools she applied to.

The fact is, in-state schools cost half as much as out-of-state. If you can’t afford the higher tuition and extra room, board and travel expenses, it is prudent to encourage your child to apply to a school nearby. Unless money isn’t an issue, it doesn’t make sense to send your kids out of state just because their friends are going along for the ride. Plus, the transition will be less stressful on their bodies and souls.

The moral of the story?

Our job is to raise responsible adults and show them how to live their lives to the fullest while being practical at the same time. While our children’s education is extremely important, attending their party school of choice is not. If your financial situation doesn’t allow you to put your kids through school, help them make the right choices by choosing affordable yet credible schools while borrowing as little money as possible. Help them make responsible choices so they don’t begin their journey into adulthood burdened with a mountain of debt.

And while we’re at it, let’s all do a better job of planning for our retirement. After all, we want to be an asset and not a liability to our kids.

For my husband and I, it’s two down and two to go. Good luck with your own children!

About The Author

Yana Berlin is the founder and CEO of www.fabulously40.com, devoted to the celebration of all things, primarily women and the challenges and joys they face juggling their careers, children, relationships, and life’s other issues. Fabulously 40.com is a social network for women that catalyzes its members to celebrate and embrace their life. Since launching www.fabulously40.com. Join us as we embark on our journey to the best times of our lives at www.fabulously40.com.

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