Starting a family almost always means parents will need to make adjustments to their finances. From buying birthday presents to paying fees for extracurricular activities, raising kids can be costly.
"Children tend to be pretty big budget disrupters," says Monica Sipes, senior wealth advisor with Exencial Wealth Advisors in Frisco, Texas. Whether you want to teach your child smart money-management strategies, help them pay for college or set them up for financial success as adults, it's important to jump-start savings for kids early on.
However, it's critical to use the right accounts. The best way to save money for kids will depend on your goal. Here are seven options to consider:
1) Create a Children's Savings Account
Most banks and credit unions offer children's savings accounts, which parents can co-own. These accounts can help children develop the habit of saving, rather than spending, all their money.
"It can be a really valuable tool," says Brian Jass, advisor with Great Waters Financial in Vadnais Heights, Minnesota. Whenever his young daughter receives a gift of money, he always makes a point to encourage her to save a portion of it.
Rather than paying a cash allowance, parents may want to set up recurring allowance transfers. This can encourage children to take an active role in managing their money while earning some interest as well. As children age, they may be moved into teen checking accounts and issued a debit card. Parents remain co-owners of teen accounts to help them oversee and assist with money management as needed.