3 ways to put aside money for your children

Every parent wants the best for their children, and providing it usually requires money. The problem is some parents don’t plan ahead. So when unexpected financial situations come up, they’re caught off guard.

Wouldn’t you rather set aside money and be prepared for the costs that arise as you raise your child?

Choosing the right savings product can be tricky, though. Where do you start? Well, begin with the end in mind. To find the best savings vehicle, identify your goals. 

  • Do you want to save for annual costs like school fees or birthday parties?

  • Do you want to plan for your child’s tertiary education?

  • Do you want to give your child a cash lump sum when they turn 21 as a financial jumpstart into adulthood?

  • Do you want to help them buy their first car or home?

Once you know what you’re saving for, here are three ways to save money for your children.


1. Investment bonds

Investment bonds can be a good solution for long-term goals, such as your child’s education. Bonds are typically held for at least 10 years. If you need money sooner, it is possible to withdraw early, but it will attract tax penalties.

Alternatively, you could opt for an education bond. Education bonds are generally more tax-effective because they generally provide higher after-tax returns than traditional investment bonds.

Be aware of the 125% rule that applies to bonds. This rule prohibits you from contributing 125% more than you did in the previous year. So if you contribute $1,000 this year, you can’t contribute more than $1,250 next year. If you do, your 10-year investment period starts from scratch.


2. Home loan offset account

If your home loan features an offset account, you can use this account to simultaneously reduce the amount of interest you get charged and build a savings fund that can be tapped whenever needed.

Having quick access to a large sum of money can be vital when unexpected emergencies occur. For example, if your child experiences a medical emergency that your health insurance doesn’t fully cover, you can immediately access money from your offset account to cover the difference.


3. Children’s savings account 

A children’s savings account can be a great way to build savings for your child and teach them finance lessons.

FLX is a digital finance app where kids can set savings goals and track their progress. It is linked to a prepaid Mastercard so kids can use their savings to make purchases online and in-store. 

FLX is linked to your Flexischools account, so you can transfer money to them and set up automatic weekly pocket money payments.


Our FLX prepaid card and savings app is a great tool to teach kids how to earn, spend and save money while keeping a watchful eye on their transactions. Learn more about FLX here.

This is general advice. Read the PDSs & TMDs at www.flexischools.com.au/legal before deciding if FLX is right for you. The FLX Services & Flexischools are provided by InLoop Pty Ltd ABN 27 114 508 771 AFSL 471558 (trading as Flexischools). The FLX Prepaid Mastercard is issued by EML Payment Solutions Limited ABN 30 131 436 532 AFSL 404131 pursuant to license by Mastercard Asia/Pacific Pte. Ltd.


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