When we think about halal saving and investing for children, we often fail to think about a good long-term strategy to save for our kids. I wrote last year about how you might do this, but in this short article, I want to talk about things a bit more practically so that you can start putting your ideas into action (call it a New Year’s resolution if you want!).
Since I wrote last year’s article, I have to hold my hands up and say I’ve not truly started my children’s savings. But it was only recently that I sat down and actually questioned myself properly as to why I hadn’t.
At first, I tried to justify it by convincing myself that we’d done or bought lots of other things this year that warranted not syphoning money off the kids. But to cut a long introspective journey short, I couldn’t really come up with a genuinely justifiable reason. I realised that the things that had been going on with me are typical things that will happen in everyone’s lives. It wasn’t any real excuse to have put off saving and investing for my boys.
These things can range typically from buying significant assets (house, car etc), holidays, etc to simply feeling like you don’t have enough to be saving for somebody else too.
I decided enough was enough. It’s time to just start.
The first thing I did was sit down with my wife and decide realistically what we could save for the kids each month. Everyone will be different, but I’ve always found that when you just commit to sacrificing a certain amount every month for a particular reason, it just gets done. You don’t really miss the money because you work your life around it.
At the moment, I’ve gone for a figure that I genuinely won’t miss. I was fortunate that certain outgoings have just ceased for me, so all I’ve done is kept the same figure outgoing but directed towards my kids instead.
I want to get to a point in a few months, however, where I’m saving an amount that makes me feel the pinch a little bit but isn’t so much as to genuinely compromise our existing lifestyle.
If you’ve read the article from last year, you’ll know that I’m a proponent of saving via investments in the stock market. This helps to avoid inflation eating away at cash. The good thing about the stock market is you can invest relatively small amounts. Over the next decade or two, I’m hoping to build up a really good portfolio for my kids.
There is no substitute for time advantage. If your parents could have invested in the stock market or, say, London property 20-30 years ago for you, you would have reaped significant awards. If they’d happened to have stuck some money into Amazon in its early days, you probably wouldn’t need to even be working! That’s what I’m hoping that I can do for my kids – at the minimum, build up a really solid portfolio and, at best, hit upon investment or two that materially affect their financial lives to the extent that they could be financially independent by the time they’re adults.
It goes without saying that all of our saving and investing needs to be done in a halal manner.
What you can do
If you’ve not started your children’s investment journey yet, I want you to do x things:
- Sit down and work out how much you can sacrifice per month for them – be ambitious here, don’t just go for a comfortable number.
- Decide on your investment strategy – feel free to look at last year’s article for some inspiration here.
- Comment below or contact us to tell us what you’ve decided!
There really is no time to waste when it comes to investing and saving for your children. They might not appreciate it now, they might not appreciate it in 15 years’ time. But I know that if I achieve my goals when it comes to investing for my children’s future, it will have a material impact not just on their lives, but also on their ability to be financially independent and focus their efforts on doing good for society.
Please note that the content of this article may not be applicable to all jurisdictions Wahed is live in.