8 Small Ways to Invest Big in Your Kids

Editor’s Note: Parents.com has partnered with LearnVest.com to bring you a monthly series of posts about money topics related to moms.  These guest posts will be shorter, edited versions of longer features from LearnVest.com.

Sometimes it can feel like you’re throwing your money down a black hole that happens to be wearing a onesie. But there are ways you can invest money in your child and see a big return, and we’re not just talking about buying savings bonds.  While many of the things you want for your children may seem out of reach now, making little investments now can get them where you want them to be while improving your own finances.

1. Give a $20 Allowance for Cleaning Out the Garage

Studies show that giving an allowance can actually lead to lower financial literacy, lower levels of motivation, and aversion to work. We’ve come down on both sides of the issue of paying for chores, but most experts agree that paying children extra cash for tasks that go above and beyond their normal duties will help both you and them reap benefits later. They’ll have solid finances and you won’t need to bail them out or support them.

Get started by using this website for assigning chores and rewards.

2. Pay $12-$60 for a Year of Girl or Boy Scouts

Group activities encourage cooperation, learning, and healthy habits. Girl Scouts is one of — if not the — most affordable activity available for young girls. But there’s another reason to love a membership: Girl Scout members now learn financial literacy skills as well. Badges added to the roster include Money Counts, Money Manager, Philanthropist, Business Owner, Savvy Shopper, Budgeting, Comparison Shopping, and Financing My Dreams. Boy Scouts have similar merit badges in Entrepreneurship, American Business, and Personal Management, which require them to save up for, budget, and plan for a major purchase.

How much you pay for your own kid’s involvement with the Scouts will vary depending on where you live, but even at its highest price, it’s not too bad.

3. Deposit $200 in a 529 Plan

A 529 plan lets you save tax-free for your child’s college education. Because it’s an investment account, money you deposit will grow at about 7% a year through the years. If you deposit just $200 when your child is 5-years-old, your money will have more than doubled by the time she goes to college; she’ll have about $500 to pick up everything she needs. Think about what depositing $200 a month will yield over 18 years!

You might be wondering if it’s even worth saving for college at all, when it’s so expensive. A college education is still the fastest ticket to the American Dream…unless your child is burdened with students loans. According to FinAid.org, gift aid from the government, colleges and universities, and private scholarships pays for only about a third of total college costs. And taking out loans to cover the rest is much more expensive than saving ahead of time. FinAid.org estimates that if, in the years before your child enrolls in college, you save $200 a month for ten years at 7% interest, your child would have almost $35,000. But if you borrow the same amount at 6.8% interest and pay it back over ten years, you’ll be making payments of over $400 a month. $400 versus $200 a month. Which would you choose?

4. Allow $100 as a First Financial Mistake

We all make financial mistakes. But the hope is that we can avoid some of the bigger ones by learning from small ones. Keep this in mind the first time your kid blows $100 on a ridiculous purchase. $100 is a lot, but as our CFP® Sophia Bera points out, better $100 now than $1,000 or $10,000 later!

Take full advantage of this moment by sitting down with your child and asking questions about his mistake. Was the purchase worth it? How could he have avoided the situation? What will he do next time to prepare for contingencies? Consider that $100 you just spent as education for your child. Just resist the urge to jump in and fix things — then the lesson will be lost.

5. Spend 13 Cents More Per Pound for Organic Produce

A recent study found that 38% of conventional produce has traces of pesticides, while just 7% of organic produce does. This is a big deal, as a 2010 study found a close correlation between the amount of a certain pesticides present in children’s urine and the severity of their ADHD. And prenatal exposure to pesticides has been shown to harm children’s brain formation and lead to lower IQs.

If buying all organic foods seems like a tall order for your grocery budget, you can pick and choose produce–some types are more likely than others to have pesticide residue. Find our list here.

Read about the remaining 3 small investments at LearnVest.com.

Plus: Don’t forget to also sign up for the Baby on Board Bootcamp newsletter, a free newsletter that helps moms budget and manage family finances better over a course of 10 days.

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