How to Start Saving Money Now for Your Toddler
According to the U.S. Department of Agriculture, it will cost approximately $241,080 to raise a child who was born in 2012 through age 17 ̵1; and this doesn̵7;t even include the cost of college. Sure, this figure is enough to instill panic in even the most practical of parents. To prepare for the ever-growing costs associated with raising your child, you̵7;ll want to start saving now ̵1; long before he understands the value of a dollar.
Instructions
Open a dedicated savings account as soon as possible. This is one of the simplest and easiest methods of saving money for your toddler. Since very young children are not yet aware of the value of money, add all of the money your tot receives as gifts into the account. Most savings accounts offer interest; even if it̵7;s minimal, it will allow your investment to grow. If possible, you can set up automatic deposits into your child̵7;s savings account from your checking account. Even if you begin adding just $50 a month to your child̵7;s savings account when he̵7;s 2 years old, by the time he̵7;ll have close to $10,000 in his savings account by the time he̵7;s 18 ̵1; plus interest. Some parents choose to keep these savings accounts a ̶0;secret̶1; until their children graduate from high school; others allow their children to begin making their own contributions once they̵7;re old enough to understand how money works. Start a 529 savings plan. A 529 plan is a government-sponsored tax-savings plan designed to help your child save money for college. You can choose from two options when opening a 529 plan: a pre-paid tuition plan or a college-savings plan. A pre-paid tuition plan is a guaranteed investment that allows you to save for tuition costs only, but locks in tuition rates at eligible colleges and universities. A college-savings plan, on the other hand, covers all qualified expenses, including tuition, room and board, book costs and any mandatory fees that may arise. A college-savings plan is more flexible and has a higher potential return on investment than a tuition-only plan; however, it does not lock in college costs, is not guaranteed by your state and is subject to market risks. Open an investment account. If you want to save money for costs beyond college, you can open an investment account for your child. Once your child reaches adulthood, the money can be used for expenses related to home ownership, the purchase of a car, or ̵1; even thought it seems light years away ̵1; his retirement. Since most states do not allow children who are under the age of 18 to own or trade stocks, you̵7;ll need to set up a custodial account. Options include a Uniform Gift to Minors Act account, which allows a minor to own securities without requiring an attorney to set up a trust, or a Uniform Transfer to Minors Act account, which is similar but also allows minors to own other types of property, such as real estate or fine art.
