Dad dot info
DAD.info form. Ask questions, get answers
DAD.info | Family | Money | Your money | Saving: a basic guide

Saving: a basic guide

mattz118

mattz118

Among the many complex and wonderful feelings you have when you first become a dad is the urge to give your child the best start in life. A key way to do this is by setting up some sort of saving scheme on their behalf.

There are lots of questions to consider.

Why save?

In the first few years of your child’s life, the chances are that anything he or she needs will be paid for directly out of your income: food, clothes, shoes, toys, all the immediate day-to-day things that matter to your family.

But as they get older, kids’ needs change. They start wanting things that are more expensive.

If they go to college, the chances are that they will need a contribution towards their accommodation and living expenses. That can cost hundreds, sometimes thousands of pounds.

Is it worthwhile saving?

Even small amounts set aside every month can make a huge difference. For example, if you were to save £20 a month from the time your kid is born until the age of 18, the total would be worth £8730, assuming annual growth at 7 per cent.

Or, if you were to put aside their Child Benefit (worth £84 a month), the total value of your savings would be £36,670 at age 18.

Just think of all the great things your child could do with that sum: apart from college costs, there might even be some money left over for a deposit on a small flat.

Can I really save that amount of money?

There are several answers to that.

  • All surveys show the most committed savers are those who are doing so for their kids.
  • Never assume you are the only one who has to save for a child: grandparents, other family members and friends can all chip in small amounts, regularly or as one-offs. Savings plans like Child Trust Funds specifically allow both types of payments to be made.  

What’s the best way to save?

Here are a few tips.

  • Try to set a target or a specific goal, for example paying for your kid’s first year at college, or buying their first car.
  • Always save what you can realistically afford. A sensible target you meet every month is better than a grand scheme that you might slip up on.
  • If you start saving very early on and have, say, up to 18 years before the money is needed, you can take more risks. This means it is worth looking at shares rather than deposit accounts.
  • A few years before the money is actually needed, reduce the risks you are taking, perhaps by shifting part of your savings each year into a building society account. This means the pot you have saved to date will be better protected against stock market volatility.

 

 

Related entries

How to financially survive the end of furlough

How to financially survive the end of furlough

The UK furlough scheme will come to an end this week on 30th September. Since March 2020, 11.6 million UK workers have been furloughed by their employers as a result of the Covid pandemic. The UK government has been paying up to 80% of their wages in order to keep...

How to Create a Household Budget

How to Create a Household Budget

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery. --Charles Dickens Money. It's not a fun subject, but a necessary one. Sorting your finances gives...

Money Worries? Help is at Hand

Money Worries? Help is at Hand

2020 has been the toughest year ever for a lot of people; bringing difficulty and even tragedy to many. Major retailers have gone to the wall and more are likely to follow, causing further grief and heartache to many who will lose their job. The low paid are the most...

Latest entries

What to consider when choosing a primary school

What to consider when choosing a primary school

If your child turns 4 years old between 1 September 2021 and 31 August 2022 they will most likely start school in September 2022. You will need to choose and have applied for your chosen school(s) by January- so now is the time to be visiting local primaries and...

How to have a ‘good divorce’

How to have a ‘good divorce’

This week marks Good Divorce Week and Dad Info is gathering tips and information from those in the know about how to have an amicable, less painful divorce experience. In England & Wales, 42% of marriages end in divorce; that means there’s only a 1 in 2 chance...

How divorcing couples can save thousands this Christmas

How divorcing couples can save thousands this Christmas

Every day at Dad.info we talk with parents who are struggling through costly court hearings. We strongly believe that mediation is a route that can take the conflict out of separation. Hands up who would like £500 towards mediation sessions? Too Late for Court...

Pin It on Pinterest