As parents, one of the greatest gifts we can give our children is a strong foundation for their financial future. Teaching them smart money habits and setting up systems for saving and investing early can help them build wealth and financial security as they grow. Whether it’s saving for their education, teaching them about budgeting, or helping them establish credit responsibly, the steps you take now can make a lifelong impact.

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1. Open a High-Yield Savings Account

    • Consider a high-yield savings account like Ally Bank to start building savings for your child.

    • Ally’s Buckets feature allows you to allocate savings for specific goals, like college, a car, or future expenses.

    • Use Ally’s Spending Account Round-Up feature, where everyday purchases round up to the nearest dollar and the difference is added to savings.

2. Start a Roth IRA at Age 16

    • If your teenager has earned income, open a Roth IRA for them.

    • Contributions grow tax-free, making this an excellent way to teach long-term investing while providing a head start on retirement savings.

3. Invest in a 529 Account for Education

    • A 529 account is a tax-advantaged savings plan designed for education expenses.

    • Contributions grow tax-free, and withdrawals for qualifying expenses like tuition are also tax-free.

4. Add Your Child as an Authorized User on Your Credit Card

    • Help your child build credit before they turn 18 by adding them as an authorized user on a credit card.

    • I recommend the Chase Freedom Unlimited for its cash-back rewards and easy management tools.

    • Teach them how to use credit responsibly, so they understand its benefits and pitfalls.

5. Teach Passive Income and Set Them Up with a Business

    • Introduce your child to the concept of passive income through examples like creating digital products, starting a YouTube channel, or selling on platforms like Etsy.

    • Help them set up a small business as a teenager, such as a lawn care service, tutoring, or drop-shipping, to build entrepreneurial skills.

6. Sign Up for Cash-Back and Savings Apps

    • Introduce apps like Rakuten or Ibotta to show how small savings from purchases can add up over time.  They can’t sign up themselves until they are 18 but you can teach them the value of using this service. 

7. Teach Budgeting by Simulating Bills

    • Assign your child “bills” to pay with their allowance, such as mock utilities or rent.

    • Collect the “bill money” and secretly deposit it into their high-yield savings account.

    • This method teaches responsibility and budgeting while building their savings.

8. Consider a Custodial Investment Account

    • Open a custodial investment account to introduce your child to the stock market.

    • Let them help choose stocks or funds to invest in, which can teach them the importance of long-term investing and financial literacy.

9. Start Teaching Generosity and Giving

    • Encourage your child to save, spend, and give.


    • Help them choose causes they care about and set aside a portion of their allowance or earnings for donations.
    •    
    • Charitable donations are often tax-deductible, allowing you to potentially        reduce your taxable income while supporting a good cause.. 

10. Whole Life Coverage for Children

    • Gerber Life Grow-Up® Plan: This policy offers whole life insurance for children, locking in affordable premiums and providing lifelong coverage.
      The coverage amount doubles when the child turns 18 without increasing the premium.

    • Builds Cash Value Over Time
      A portion of the premiums goes into a cash value account, which grows over time.
      The cash value can be borrowed against or withdrawn, providing financial flexibility for emergencies or significant expenses like education.

    • Affordable Premiums
      Gerber Life offers competitive rates, especially for policies purchased at a young age.
      Premiums remain fixed for the duration of the policy, making it easier to budget.

    • No Medical Exam for Children’s Policies
      Applying for children’s life insurance doesn’t require a medical exam—only a few health-related questions.
      This makes it an accessible option for families.

    • Guaranteed Insurability
      Policies like the Grow-Up® Plan guarantee the child’s ability to purchase additional life insurance as an adult, regardless of their health.
      This

Final Thoughts

Taking action now to secure your child’s financial future not only prepares them for adulthood but also instills valuable money habits and lessons. From teaching budgeting to creating savings and investment accounts, each of these steps helps build a solid foundation for their financial independence. By being intentional today, you can help ensure your child’s tomorrow is full of opportunity and stability.

Embrace simplicity, live fully, and cherish each day – until next time, Devynn.

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