Four Things Parents Should Know

The majority of parents feel uncertain about how to save for their children. With many savings plans, loans and mutual funds to choose from, some parents just avoid the conundrum of finances and keep their money stuck in a savings account for years. Keeping your savings in a low-interest gaining savings account is not the best option for you or your child. Read on to learn how to avoid more common mistakes parents are making:

1. You save for your child's college fund before you save for your retirement fund.

There are plenty of loans and scholarships available for college, but there is none available for retirement. Your child is actually better off if you save nothing for their college. Does that sound too good to be true?

College is no longer necessary for a successful career. People forget that colleges are big businesses trying to survive, and that current technological jobs do not require a college education. Bill Gates dropped out of college to pursue his techy dreams, most millionaires and successful entrepreneurs never went to college, and you don't need a college degree to become a web programmer, designer, photographer, or business owner.

2. You aren't aware of all the college scholarships available.

Most parents save for their child's college, so why shouldn't you? There are thousands of untapped scholarships. If your child knows he won't have his college paid for, he will work that much harder to get good grades, scholarships, and grants. Kids who know they have to fund their own college, instead of relying on mom and pop, work harder at their grades and show more discipline than kids who do not. The danger of supplying your kid with all the funds is that they won't appreciate their education as much.

3. You depend on your partner to manage the finances.

Although this concept traditionally applied to women relying on their husbands, today it goes both ways. Communication about money is something partners avoid. It can be a source of heated emotions. There may be disagreements about how to handle money, lack of trust, or fear of money itself. All of these negative associations with money can lead to partners avoiding the topic. Or one partner does not take as much responsibility in handling finances.

5. You don't understand your bank's systems.

Banks are aware that parents need help understanding their finances, and many offer educational courses just for that purpose. The courses teach everything from how to save, to how to invest, to understanding complex banking processes like the business rule engine, and how banks process loan applications through prescreen, a software system that determines an applicant's financial health. Financial education is not as daunting as it first appears. Parents should start slow, with a beginner's book or course, and work their way up.

6. You avoid learning about investing.

Parents often put investing on the back burner. Financial demands increase with each child, and investing can just seem too intimidating. Should you go to a financial planner? Should you ask your bank for advice? There are many people out there willing to take your money. Whom can you trust? Even bank seminars are usually presented by third-party salespeople with a pitch and a motive. Most financial planners are salespeople, not finance experts. When you begin shopping around for where to put your money, keep a wary eye on who is truly experienced and has a track record of making money, and who just has a clever and likeable pitch.

About the Author: Amy Brevard is a Freelance Writer working with Innuity. For additional information regarding the business rule engine or prescreen, go to Zootweb.