As parents, it’s in our nature to want to help our children as much as possible. We want our kids to have the best education and to eventually have a home to call their own – yet school, tertiary education and house deposits can be daunting, big-ticket items.
So, how can you afford these things? Put simply, the answer to that question is by saving – which can be easier said than done! That’s why we’re breaking down the best ways to save and help you reach the goals you have in mind.
Start early and set your goals
It is never too early to start saving for your child’s future. Whether it’s for university, private school or their first house deposit, getting started as early as possible will help alleviate the ‘in-the-moment’ stress which is often associated with having to spend or save a lot of money in a short period of time.
By starting to save early, you will reduce the burden and stress for yourself at a later date. Starting to save early will also help you to take advantage of the benefits of compound interest, which we will dive a little deeper into below.
Benefit from compound interest
Compound interest is interest paid on the initial sum of money you invest, as well as on the interest you have already earned. This means that you earn interest on your interest!
For example, let’s say you start with an initial deposit of $5,000 and invest $1,000 per month for 15 years at a compound interest rate of 5%. At the end of 15 years, you would have a total savings of $277,857. Of that savings, you would have earned $92,857 of interest, which just goes to show how hard compound interest makes your money work.
Make a commitment and stick to it
The most important part of saving for anything is making a commitment and sticking to it. From $100 a week to $1000 a month, set yourself rules and don’t break them. Like eating healthy, your savings plan will become less of a ‘diet’ and more of a lifestyle. The results will be worth it in the end.
Work out the best way for you to invest
There is no ‘one size fits all’ rule for saving for your kids schooling or their first house deposit. What’s important is that you find out what works best for you. Whether it’s putting money in a compound interest-earning bank account, paying extra off your mortgage and keeping better track of your spending, or investment bonds that are tax effective and highly flexible, our team can help you find what will work for you.
To find out more, call (03) 9600 2124 to schedule an appointment with the Rising Tide Financial Services’ team today.