Arnoldas Kapler, the financial manager of the “Magnus” credit union, points out that even small but regularly saved amounts over several years can become a significant financial foundation for a child’s future – for studies, starting independent life, or the first home.
This does not necessarily require hundreds of euros per month. According to A. Kapler, when saving for a longer period, the most important thing is not a large initial amount, but the decision to start as early as possible.
“Parents often think it’s worth starting when they can save more. However, in the long term, consistency and discipline are more important. Ideally, saving should start from the child’s birth, and if you haven’t done that – start as soon as there is an opportunity to regularly allocate at least a small amount,” says A. Kapler.
What can 20 euros do in 18 years?
A simple calculation allows you to see the effect of long-term saving. If 20 euros were set aside every month from the child’s birth, by their 18th birthday, the contributions alone would amount to 4,320 euros. Saving 50 euros per month would increase the amount to 10,800 euros, and 100 euros to 21,600 euros. And this is without counting any possible returns.
“We often underestimate small amounts because we look at what 20 or 50 euros can change today. However, when saving for a child, one should look not at one month or year, but at a decade or longer. Then even small regular contributions gain a completely different weight,” says A. Kapler.
The accumulated amount does not necessarily have to cover all future study or housing expenses. Several or several thousand euros can become a financial foundation for starting independent life – helping to pay for studies, rent, the initial payment for the first home, or other relevant needs at that time.
Saving money is not enough – it is important where it is kept
Another question is what to do with the regularly saved money. The answer, according to the financial manager, primarily depends on when it will be needed and what risk the family is willing to take.
If only a few years remain until the planned goal and the main thing is to preserve the accumulated amount, one option may be a savings account or deposit. This allows avoiding larger value fluctuations and earning interest.
The situation is quite different if the child is two, five, or seven years old today and the money is planned not to be touched for another decade or longer.
“If the goal is to save for 10, 15, or 18 years, it is worth considering long-term investment options, such as broadly diversified investment or ETF funds. Historically, over the long term, they have offered the possibility of higher returns than deposits, but at the same time, one must accept value fluctuations. Deposits are more suitable for those who prioritize lower risk and capital preservation,” explains A. Kapler.
Therefore, according to him, the first thing to answer is not the question “where does it pay the most now?”, but three simpler ones: who am I saving for, when will this money be needed, and what risk am I willing to take?
One of the most common mistakes – waiting until the end of the month
Even choosing the right saving method, the result will depend on whether regularity can be maintained. Here, according to A. Kapler, families often make a very simple mistake – they leave saving what remains after all monthly expenses.
One month it may be 100 euros, another 20, and the third none at all.
“If you want to save consistently, it is better to choose a realistic amount and set up an automatic transfer immediately after receiving the salary. Then you don’t have to decide anew every month whether you will save this time. It simply becomes part of the family budget,” says the financial manager.
Another common mistake is not starting at all because the amount seems too small. However, it is precisely the long period that allows starting with less and gradually increasing the monthly contribution as the financial situation improves.
Or maybe the child should know about the savings too?
Money saved for a child can also serve another function – becoming one of the first practical financial literacy lessons. It is not necessary to talk to a primary school child about investment returns or compound interest. You can start with much simpler things: show that part of the money received for a birthday is spent now, and part is saved for a bigger goal. Later, the child can see how their savings grow and contribute to decisions themselves.
“Financial literacy development happens not only through theoretical knowledge. Simple family conversations give a lot. For an older child, you can show how their savings grow and try investing with a small amount together. Even a small loss from a wrong decision can become a valuable lesson about risk and responsibility,” says A. Kapler.
Didn’t start from birth? That’s no reason to wait another year
If the child is already five, ten, or fifteen years old, previous years cannot be recovered. But that does not mean it is no longer worth starting.
It is more important to assess how much time is left until the chosen goal, how much the family can allocate without harming the daily budget, and turn saving into a regular action.
“The most important thing is not the amount, but the decision to start. People often overestimate what they can save in a year and underestimate how much can be saved in 10 or 15 years. If today you can set aside 20 or 50 euros per month, start with that. As income grows, you can always increase the saving amount,” says Arnoldas Kapler, financial manager of the “Magnus” credit union.
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