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Growing Kids Savings

Kids are expensive. According to the USDA1, the average cost to raise a child from birth to 18 years of age in 2015 (most up-to-date) cost $233,610. That’s a lot of money! Regularly saving cash could help your kids now and in the long run if you start saving young. Knowing your different options can also help you save for different goals. Consider these accounts for saving money for your kids:

Kids Savings

A parent or custodian can open a savings account at a credit union or bank for a child of any age, as long as the adult is the primary account holder. It’s easy to contribute money to this account through automatic transfers, online banking or by depositing money in-person.

In many cases, both the adult and minor can access the funds at any time for any reason. This would be a good learning opportunity to take your children to deposit money into their account. Besides the above standard offerings, the best kids savings have no minimum balance requirement and no monthly fees.

Share Certificate

If you’re able to leave your money invested for longer periods of time, consider putting your money in a share certificate. Much like a bank’s certificate of deposit, this account pays higher dividends than other savings accounts on funds you deposit for a fixed period, helping you save more.

Custodial Account

A custodial account is a savings account set up and managed by an adult for a minor. A custodial account can be a great way to save on a child's behalf, or to give a financial gift. Basically, these are easy-to-open accounts used to invest in stocks, bonds, mutual funds, and more, all to give your child a better future.

UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act) allow an adult to invest money on a child's behalf. You can open a custodial brokerage account at a bank or brokerage firm.

529 Plan Accounts

529 college savings accounts help you build toward your child’s futures while offering unique tax advantages. With low fees and expenses, you are able to save more money for your kid!

Roth IRA’s for Kids

A Roth IRA for Kids is a tax-advantaged retirement account opened for a child who has earned income.  This account has to be started and managed by a parent or other adult as a custodial account. This type of account offers certain tax advantages over other savings accounts.

Your child's savings account choice depends on your dreams and goals for your children. If you have questions be sure to get in touch with a reputable Financial Planner. 

 

(1) https://www.usda.gov/media/blog/2017/01/13/cost-raising-child