Saving for the Next Generation: How to Build a Nest-egg for your Children

Saving Money for Kids
While the maintenance of a minimal base rate has many benefits for the economy, it is often bad news for savers. This has certainly been the case recently, as easy access and notice account rates have been slashed to enable banks to retain a viable profit. With an increasing number of accounts failing to offer a return above or beyond inflation, savers are once again being forced to consider their financial plans for the near-term.

Although this is troublesome for anyone who wants to save, it is even more problematic for those who are looking to build their wealth and create a burgeoning nest-egg for their children. After all, these individuals often find that their disposable income is stretched beyond its limits, as they look to fund their own retirement and save for the next generation while coping with the rising cost of living.

How to Save Successfully for the Next Generation

There are steps that you can take to negate these economic challenges, however, whether you simply want to save for your child’s future education or provide them with a foundation that they can build on to achieve financial security in adulthood. Consider the following: –

 

  • Choose Alternative Savings Vehicles

 

In the current climate, traditional cash savings accounts are struggling to provide a viable value proposition for citizens. This has created a pressing need to consider alternative savings vehicles, from investment accounts and managed portfolios to bonds and similar financial market derivatives.

Gaps in knowledge can make some areas of the financial market less accessible than others, but simple and low-risk options such as dividend investment and bonds can deliver secure returns at a viable rate. The same can be said for managed portfolios, as these can be tailored to suit your budget and appetite for risk while they are also adapted to suit the prevailing economic climate.

 

  • Leverage the Opinion of Experts to Plot the Management of your Funds

 

If you do want to access a wider range of markets in order to build your savings, it may be wise to partner with a wealth management expert or financial planning service. Some firms even combine these two services, which in turn enables you to invest your money sensibly while also planning for the long-term distribution of your estate.

Investing through this type of service also affords you control over your capital, which can be useful when determining how savings are managed while your children come of age. Above all else, discussing your goals and resources with experts will help you to minimise tax and ensure that are able to pass as much capital as possible to your children.

 

  • Do Not Lose Sight of your Own Savings

 

As you begin to focus on your children’s savings and future, it is easy to lose sight of your own investments. While it may be natural to consider these as separate goals, however, it is important to recognise that your ability to build a nest-egg for your children relies on your existing wealth and the way in which you manage your investments.

So, if you are to create a financial legacy for your children and avoid a severely underfunded retirement, you will need prioritise your own investment portfolio and savings. This will prove the most effective strategy in the long-term, as it will optimise the amount of capital that can be bequeathed to your children once you have passed.

Photo: Images Money

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