The month of May is often high season for confirmations. For the confirmands, this often means a number of gifts, often in the form of money.
Irrespective of how much money the confirmand receives in the end, it can pay to have a plan on how the money will be managed.
– If you know that the money will remain untouched for a long time, you can consider placing it in a mutual fund. It is a suitable form of savings for those who want to save for the long term, at least five years, says consumer economist Magne Gundersen at Sparebank 1 to DinSide.
If you are going to use the money sooner, you might as well leave the money in an account with the best possible interest rate, he explains further.
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Clear advice
There is no definitive answer to what is a sensible use of the confirmation money. Many use the confirmation money for expensive equipment that they otherwise cannot afford, such as sports equipment, a PC, travel, housing or education.
Regardless of what you want to spend the money on, consumer economist Silje Sandmæl at DNB has clear advice for parents.
– I recommend that the parents arrange for a cashless confirmation. It takes away the financial pressure that many of the guests feel, and the path to savings is also shorter for the confirmand. Giving money in an envelope can create money pressure. When the amount becomes visible, many people tend to compare the amount they have given, she tells DinSide.
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In order to create a cashless confirmation, the parents should talk to the person confirming what they want to save for. You can then create different accounts for each of the savings goals, according to Sandmæl. Furthermore, guests can access the lists and choose which savings target they want to contribute to.
This could, for example, be a share savings account, or a savings account for the moped label.
– By giving money cash-free to a designated purpose, the confirmant does not waste the money on something he or she will regret afterwards. It’s easy to feel a little newly rich after the confirmation, and then the money is often loose, explains Sandmæl.
Clear advice
This pays off
Confirmation is a good opportunity to talk to the person confirming about money, finances, savings and planning. Gundersen calls this a bit of financial education.
He recommends parents to talk to the confirmatory both before and after confirmation about finances in general and especially about the confirmation money.
– It pays to get the best possible interest rate or return on the money. If you are not going to use the money for a long time, I recommend finding the account that gives the highest interest. The interest rate is higher now than before, but not particularly high. In return, the money is 100 per cent safe in the bank, says consumer economist Gundersen.
– For long-term savings, for example to buy a home in 8-12 years, saving in mutual funds is a good option. It involves the risk of some loss, but also the possibility of a return far above the bank interest rate, he concludes.
2023-05-21 12:41:42
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