How to Start a Successful College Fund for Your Child on a Small Budget

How to Start a Successful College Fund for Your Child on a Small Budget

I wish I would have known sooner the major importance of building a savings at a young age. After spending years of letting our kids blow their birthday money on shopping sprees, we finally decided to start being smart with their savings. Not many parents are aware of savings accounts for kids beyond what their local bank has to offer. Encouraging your kids to save at a young age is critical, there is no way around it. Building any kind of savings for them is a smart move, but you could be leaving money on the table. So what savings accounts should you look into for your kids? Let’s talk about how to start a successful college fund for your child on a small budget. 

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Talk to kids about saving

Before you start saving money for them, be sure you are talking to your children about money and the importance of saving.

Many children grow up only hearing about financial struggles. Things like, “We can’t afford that.” or “We don’t have any money.” Even though you may be financially struggling, it’s super important that you encourage your children to grow up with a healthy money mindset.

Remind them of how putting money into savings accounts is beneficial for them. If they want to be “rich” they can only do that by not spending money.

The importance of saving at a young age

Let’s face it, starting anything earlier in life usually gives you an advantage later. Start exercising at a young age and you’re more likely to experience better physical fitness into your golden years. The same goes for building a savings.

Take a look at this Dave Ramsey chart that shows the importance of building a savings at a young age.

Looking into savings accounts for kids to start building a savings at a young age? Look no further than these savings account ideas and strategies.

In this scenario you’ll see two brother’s savings plans. The first brother, Ben, saved $2,000 for 8 years from the age of 19 to the age of 26. His brother Arthur then caught on to the benefits of saving and opened a savings account for himself. Arthur then began to save $2,000 a year.

While Ben stopped saving, Arthur continued saving from the age of 27 to the age of 65. When they both hit retirement, Ben still had more money than Arthur even though Arthur had saved his money for 30 decades longer than his brother.

Why this is important

This simple chart shows the importance of building a savings at a young age. If you as a parent are able to help your child save money for only the first few years of life, the lasting effects can go all the way into their retirement if you are smart about how you do it.

The best savings accounts to gain interest

There is no doubt that contributing to a high yield savings account for your children is the simplest way to get them earning interest on their savings at a young age. And you only need $100 to open one!

While most regular banks only offer around a .05% return on interest, CITbank offers a high return of 1.55%.

Looking into savings accounts for kids to start building a savings at a young age? Look no further than these savings account ideas and strategies.

When you are first starting to save for your children, a basic account with a lower interest rate will work just fine. When you are ready to open a high yield savings account, be sure you have at least $100 saved up before you begin the process.

Get started with a CIT Bank high yield account online.

Other smart money posts:

How to start saving at different ages

Saving will look different depending on your child’s age. Here are a few ideas on how you can begin helping your children start to save no matter what their age.

Birth – 5

Take advantage of these early years before children start to really crave toys and presents. Invest money wisely.

  • Ask for money instead of birthday gifts
  • Save any financial gifts they are given
  • Set up automatic withdrawals each month from your account to go into their savings

Baby years savings plan:

  1. Save $50 per month for your child.
  2. After 5 years they will have a savings of $3,000
  3. Put this money into a high yield savings account and continue contributing until they are 18.
  4. By the time your child graduates, they will have over $12,000 saved

Age 5-10

These are the years when your children can start being more hands on with their money and their savings. Be sure to include them in it and let them know if you are helping them save as well. Here are some ideas on how they can start being more involved.

  • Contribute 30% of their chore money to savings
  • Put half of their birthday and Christmas money into savings

Age 5-10 savings plan

  1. Continue contributing $50 per month to savings
  2. Encourage children to contribute an additional average of $20 per month
  3. This will give your child around an additional $3,000 by the time they graduate

Age 10-18

Now are the years when children can start working to find their own ways to make money beyond chores and birthdays. Encouraging them to find ways to earn money through dog walking, lawn mowing or babysitting is a great way to instill a strong work ethic at a young age.

Age 10-18 savings plan

  1. Continue contributing $50 per month to savings
  2. Continue to contribute extra $20 from chores and/or birthday money
  3. Begin contributing 10% of paychecks into savings

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It's smart to plan ahead for your child's future. See how to easily start a college fund for your child on a small budget. Plus the best accounts to use.

About The Author

Renee

Renee is the blogger behind The Fun Sized Life. After downsizing with her family, she also took the time to get serious about he finances. Now she is sharing the wealth with all of her readers.