I felt really fortunate this weekend because I got the chance to spend lots of QT with my goddaughter. She’s cute, cuddly, and always coaxing me to play a game or turn myself into some animal that she can ride. It’s hard to believe that she’s already 2-years-old. Whether you have your own children, godchildren, nieces, nephews, and/or other kids that play a significant part in your life, I know you shell out money left and right for them. Kids are expensive! For most of us, they are a worthy investment (unless you got some bad ones – just joking).
But, are you making the smartest choice when you put away savings for a child? Well, I recently read a study, “Saving For A Purpose: The Financial Consequences of Protecting Savings.” I’ll spare you the academic jargon and simply highlight 3 findings for people with kids in their lives:
- People are less likely to raid savings funds set aside for children;
- In making savings sacred through earmarking (e.g. for a child’s education), people are willing to incur high credit card debt instead of using their savings; and,
- People are motivated to do so because drawing down the savings would make them feel financially irresponsible.
Interesting, right? It’s good to know research like this because we then become aware of our own biases and behaviors. Leave a comment below sharing what mechanism you’re using to save for your kid’s (or other children’s) future.
The Promised Tip: Last week, I promised to share a tip on hitting your investment goal for 2016: Set up an automated direct deposit (or transfer) to the account that you want to build the investment dollars. Then divide your number by the frequency of the transfer, and then begin putting money into the account.
There’s Still Time I will be speaking at a Business Leadership Summit dinner this Wednesday, February 24th at 6pm, hosted by Willow Creek Church in Chicago. You are welcome. You can sign-up here.