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Savings For Children - Best Savings Options for Children

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From the moment you take your first look at that newborn baby, you feel a strong desire to provide the best life possible for your child. No doubt, this desire to provide for your offspring will instill in you an urge to set aside money for their future. College tuition, a first car and a head start on their own are all examples of financial support that parents typically give their children. Just as vital is teaching your child the importance of saving money. In order to be able to assist your child with a head start financially and the ability to save for themselves, you need to have an idea of what tools are at your disposal. There are multiple options that parents can choose to go about saving for their child’s future. The best option for you and your family will differ from another family, but these are some excellent options to get headed in the right direction.

At an early age, perhaps even before birth, it is important to have a plan to save money for your child, and a savings account is a great tool to use. Whether your plan is to put them through college, purchase their first car or give them a head start towards financial independence, you will need to begin as soon as possible. Savings for children can be built on over a long period of time. When planning, 18 years is a pretty good period of time to work off of. So begin by setting a goal for how much you plan to put away in an intermittent period of time, whether that be weekly, monthly or what have you. Putting aside some savings for your children can be easy, and you don’t have to put too much aside for the balance to add up.

Savings accounts are also great ways to teach your children the value of saving money. Birthdays, holidays and summer jobs are excellent times to instill the value of savings for children. Start by opening a passbook savings account as early as possible, in the name of your child, with you as a custodian. Each time your son or daughter receives money from family or friends help them learn the value of savings by putting some of the money in the account. As they get older and begin to want larger ticket items, they will begin to see the importance of saving up for something they want.

When it comes to saving for college, the best option is a 529 plan. With a 529 plan, savings for children becomes easier, and there are several tax benefits associated as well. When a child is born, the parent(s) can start up a 529 plan, with the child as the beneficiary, and add to it over time. There are limits on how much money can be put into this account over time based on the income of the parents which varies by state. When a child becomes college aged, the money is able to be used for anything such as tuition, room and board, books and many other education related expenses. There is no taxation on the growth of the distributions that are used for educational expenses, which is possibly the most attractive feature of this savings plan for children. In the event that you have more than one child and the beneficiary of a specific plan does not use the funds for college, you may change the beneficiary to another child or relative without any penalty.

Putting together savings for children is an imperative task for any parents. It doesn’t matter what your income, saving for your child or children’s future is the right thing to do. There is no parent that wouldn’t go to great lengths to ensure their child has the best life has to offer. Start as soon as birth and take advantage of the savings tools available for your children.

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