How to Save Money for Kids Using Baby Steps

One of the biggest goals among parents is to make sure their kids have it better than they did, especially when it comes to financial experiences. We want to know that they have the opportunity to live a good life - preferably one without the unnecessary stress and horrific struggles.

As much as we would like, we cannot predict or control the future. One thing we can do, though, is to save money for kids to start them out on the right financial path. If this is a goal of yours, the following are some ways to get started.

Determine What You Are Saving For

The biggest item parents try to save for is college. While this is a commendable goal, it is not the only one. Some people want to help their kids buy their first home or purchase them a car when they are 16.

Personally, I want to just save enough money for my kids to go to college, but that they can use for other things if they want. For instance, if they choose not to attend a university but go to community college or just take certification courses instead, they will have money left that they can use for a down payment on a home or whatever they choose.

What is your goal, exactly? What do you want your money to do for your kids? Be clear about it because the steps you take need to revolve around those goals.

Set Your Numeric Goal

This will require a little research. If you are looking to send your kids to college, look into how much college is projected to cost when they should be going. If you want to put a down payment on a house for them, look up the projected costs of home purchases during the specified time period.

These are just projected costs, so the actual cost could be more or less. However, these projected costs can give you a good idea of what your goal should be.

Determine Your Timeline

How long do you have to save? Break the years down into months and divide your monetary goal by the number of months you have. The answer is the amount you need to save every month. Depending on where you save, the interest you earn can help you reach that goal faster.

Take a Look At Your Budget And Income

After you have your monthly goal, you need to figure out if you already have space in your budget to meet it. If you are fortunate, you already have money to start saving. If you are already stretched to the max, you have some work to do, but it is not impossible. We will discuss ways to do this in a moment.

Something Is Better Than Nothing

Before you dig into your finances, let me say this: Something is better than nothing. Think about it: Even if all you can save for the next 10 years is $5 a week, that is still $2,600. In an interest-bearing account or the right investment, you can double that money. Even if you do not double it, though, having $2,600 at the end of 10 years is better than having nothing because you never started.

Start Now

Speaking of starting: Do it. Start right now, even if you only have $0.25 to put away. Just get started so that you build the habit of saving for your kiddos.

Of course, the earlier you start, the more time you have to save money for kids, but that does not mean all hope is lost if you are only a few years away. My oldest son is 16. It will not be long before he moves out and either goes to college or moves onto something else. I will not lie- I am a bit nervous.

Two years is not long to save at all, but I am still doing all that I can to make sure something goes into that savings as often as possible. Due to the fact that the time is so close, I have had to come up with some ideas for how to pad the savings account quickly. These are ideas I will be sharing with you in a moment, so hang tight.

Diversify

Before we jump into how to start saving money for kids, I would like to point out one more thing. As I said above, in the right account, you can double - maybe even triple - the money. The best thing you can do to grow the money you save is to spread the money out into different types of accounts.

Yes, a 529 is a great place to save, but do not stop there. Invest the money into other accounts, as well. Have multiple investment and savings streams so that you maximize your potential savings.

Get Your Kids Involved

It really is not enough just to save money for kids. They need to learn how to do it themselves, too. Sit them down and explain what saving means. Explain to them that every time they get money, a certain percentage goes into savings. Not only can these contributions help grow their account, but it does two more important things:

Teaches them how to actually make it a habit
Give them a sense of pride

In my home, we take it a little farther. When our kids get money from allowance, birthdays, and so on, they are supposed to split it four ways:

10 percent to giving
10 percent to long term saving (college funds, moving out, and so on)
10 percent to a short or medium term goal (this is for a big item they want to buy, such as a game system or a really special toy)
70 percent is theirs to blow or whatever they choose

We have been working to do this since they were little so that - hopefully - they will have good spending, saving and giving habits when they are adults.

Get Your Family Involved

You know when your Uncle Tim calls and asks what to get your kid - or even you - for Christmas? You can always say, “Hey, donate to the college fund.” There are many accounts to save money for kids, such as 529s, that give you a link or code that you can give to family, so they can contribute. Put it to use.

Maybe they can split the money they were planning to spend between a physical gift and a contribution to the future. Some grandparents will happily contribute on a monthly or yearly basis. If they offer, let them.

Check On Your Progress

Every now and again, you need to check in with yourself. Are you on track to your goal? Do you need to work harder or tweak your plan?

If your kids are little, you can get away with checking in every six months or year. The closer they get to college age, the more often you need to check-in.

Personally, as we are so close to the deadline with my oldest, I try to check in every month to see how things are going and what more I can do. With my younger three - who range from 6 to 13 - I only check in about every year. However, the 13 year old is getting closer, so I will soon start checking in every six months, at least.

How To Find the Money To Save

Okay, let’s dive into the meat and potatoes: How to actually save money for kids. I will not lie and say that it will be easy - though you never know what might happen. All of the sacrificing will be worth it though when you see your kids getting a good start in life. The following are all the ways I am using to help save for our kids. Use these ideas and get creative with your own.

Yard Sales

Here is the thing about kids: They are forever changing in sizes and interests. One minute, they are wearing their brand new pair of tennis shoes that you know fit with a little “room to grow”. Five seconds later, I hear, “Mom, my shoes are too small. They are hurting my feet.” At this point, they have hardly worn down the soles one bit.

My daughters went through an entire year of wanting to buy every single Beanie Boo made. They were on a mission. They actually set some insane numeric goal that had me thinking, “Oh my gosh! My house is going to be taken over by these things!”

They spent every dime of allowance and birthday money on these things, and Santa brought them some for Christmas. This was just in 2018. Just last year in 2019, I am informed that they no longer like these adorable stuffed things. They do, however, love the Littlest Pet Shop toys. The obsession simply switched to a new object.

That is kids for you, though. Their bodies are constantly growing and changing. As they are still forming an identity, their tastes can change in the blink of an eye. Frustrating? Yes. However, you can use this to your advantage by having those lovely things we call yard sales.

Kids can be expensive, so most parents look for any way they can to save money - especially on clothing. If you have kids’ clothes that are still in good shape, you are in luck - kids’ clothes are one of the biggest selling yard sale items. Even the clothes that are not in the greatest shape sell for play clothes many times.

When I hold yard sales, I keep the clothes that are in great shape on one table and charge a reasonable price for those. Clothes that are not so great go on a separate table. This table is the “$5 bag sale” table. You can put as many clothes as you can fit into a grocery bag for $5. It works out really, really well.

If you do not want to go through a yard sale, there are businesses that will buy used clothes from you. One of them is a company called ThredUp. They send you a bag, you send in the clothes, and if they accept them, you get paid.

There can be downsides, though. First, they only take designer clothes. Second, if they do not accept the clothes, you have to pay the shipping to get them back or ThredUp just donates them. This is not necessarily a bad thing- you are still getting them out of your way and giving them to someone who needs them. However, you miss the chance to make money from them. As we are currently talking about ways to save money for kids, losing them kind of works against the goal.

Figure Out Saving. Meet Billry Store

GET MEMBER KEY

Side Hustles

Side hustles, in my opinion, are pretty awesome - mostly because they are usually something a person is passionate about or at least enjoys doing while making some cash. One other great thing about them is that this cash is usually not budgeted in with regular household income, so you can put it toward your financial goals - to save money for kids, in this case.

If you want to start a side hustle, start by listing things you enjoy doing, things you are good at, and even things people are usually asking you for help with. Anything can be turned into an income, so do not hesitate to write an idea down. Here are some ideas to get your thoughts rolling:

Baking cakes - Offer to bake for kids’ birthday parties
Landscaping - Do lawns on the weekends
Writing witty one - liners (companies actually pay for these for social media posts or even greeting cards)
Budgeting - help people get their finances under control
Gardening - sell fresh produce at your local farmer’s market
Teaching - teach a course on Teachable or Udemy (I teach some finance courses and “adulting classes” to homeschool kids, which started by me teaching my own kids who are also homeschooled)
Dance or fitness - teach a class at your local gym
Organizing - organize other people’s home (something I have always found to be much easier than organizing my own)

There are literally thousands of side hustles you can start. If none of those I mentioned suit your fancy or help you come up with something, do a Google search for side hustles. You are bound to find something. Whatever side hustle you choose, keep that money separate. The point - at least in this case - of starting your side hustle is to save money for kids. That will not happen if you use it for other things.

One-Off Jobs

In addition to regular side hustles, you can often find a lot of one-off jobs. For instance, maybe a friend or family member needs help to clean out their garage or attic. I have a few friends that either hate doing the following tasks or simply do not have time. They are always offering to pay me to do things for them:

Wash and clean out their car

Organize their closet

Clean their kitchens and bathrooms

Tutor their kids

Clean out their garage

Sometimes it is not something they need all the time but once or twice here and there because they get behind from working or their kid really needs to pass a test. They pay me because they trust me and because we all understand each other's struggles.

You probably have some friends, family members, or even coworkers that need help with something. Offer to help. If you do a job for them, put that money directly into whatever you use to save money for kids.

Cut Expenses

Another way to save money for kids is to cut down your monthly bills. When you can decrease what you have to spend out on other things, you can increase the amount of money you can save. There is what seems like limitless information on how to cut expenses, so we will just mention a couple of important ways to do so. You can use these tips to go into greater research if you need more information.

Just about every bill you pay can be lowered, and most of them by negotiating rates. A great way to do this is to first talk to any other companies in your area. Find out what they are offering. Then, talk to your current provider. If the other companies are offering a better package, tell your current provider what that package and rate is.
They do not want to lose your business, so they will usually give you the same or a better deal. If they do not, well, you have already talked to other companies so you know who is offering the best.
How many of your bills are necessary? Cable is not a necessity, and there are plenty of free or cheap alternatives now. A landline is probably not necessary for most people. If you have the internet at home, you probably do not need unlimited data on your phone. Cut whatever you can do without.
You can decrease your monthly spending in many ways. Shop used where you can, like with those clothes that your kids are going to grow out of in a week. Even thrift stores have designer brands. You just have to be willing to look harder than you do in a department store.
Lower your monthly food costs by eating at home more and eating out a lot less. Make a meal plan and take a shopping list with you on grocery day. Avoid impulse purchases by only carrying the cash you need for what is on your list. And use coupons or coupon apps as often as you can.
If you pay a lot of debt each month, consider lowering your monthly payments by consolidating those debts into one payment.
Be sure that you keep up with how much you save so that you can transfer that money into the accounts where you save money for kids.

Make Saving Automatic

One of the best ways to save money for kids - or for anything else, really - is to do it without thinking by making it automatic. Try these two steps:

Conclusion

The goal to save money for kids is a common one, and it is very possible. No matter how close you are to needing those savings, you can still make moves that can give your kids a financial head start. Remember, start where you are with what you have. With some time, creativity, and dedication, you just might surprise yourself with the amount you sock away.

How to Save Money for Kids Using Baby Steps

Determine What You Are Saving For

Set Your Numeric Goal

Determine Your Timeline

Take a Look At Your Budget And Income