Start a separate bank account
The most reliable way for a family to save for children’s education is to set up a separate bank account (such as the ones promoted in some schools) and to place a regular amount in as they progress through school. You’ll be amazed how quickly the amount balloons into a major savings treasure chest.
By saving only $1000 per year, which is $2.73 per day (@14% growth), your child would be a millionaire by the time they are 37 years old. That is less than $20 per week to put aside. Of course this example doesn’t take into account the money taken out for education during this period.
Diversify as savings grow
Once the amount grows you could buy a selection of growth Blue Chip shares to ensure good returns on investment. Blue chip shares are usually the top 50 shares in the share registry and will return both dividend returns and capital growth. If you don’t have the time or don’t feel confident with purchasing blue chip shares there is the option of investing in an Index fund. By Googling Index Funds you can learn about the funds and the variety that’s available to invest in. There are index funds available to invest in every sector of the finance industry from your local national Top 50 to 500 shares, real estate, overseas shares, bonds – the list is endless. These funds are all managed by professionals and are very cheap and easy to purchase. Once you choose and buy them, it’s just a matter of “sitting back” and giving them time to generate dividends and capital growth for you.
You could also get your child involved in the saving process to spark their interest in saving. Buy them a savings tin that they can put spare change in. You’d be surprised how quickly the savings mount up especially if the child can convert the rest of the family to contribute regularly to their tin. I’m not talking about large amounts of money, just fill the tin with whatever spare change you have left over every day or even once a week.
It’s good if you can find a tin that you can’t open unless you use a can opener. My teenage son recently opened a tin he had for 12 months or so and it contained AUD$350.00.
You just have to get started and keep plodding along until you reach your predetermined goals. It may be quicker than you think!