There’s no disputing it. Kids are expensive. It can be overwhelming to try to learn how to save money for their future, when it is already challenging enough saving for your own!
A 2017 report from the U.S. Department of Agriculture looked at the average cost of raising a child from the time they’re born to the time they leave the nest. The conclusion?
From birth to age 17, the average cost of raising a child is $233,610.
And once you’ve accounted for inflation, that cost goes up to $284,570.
How do kids end up costing parents so much money? This estimate takes into consideration everything that you end up buying for your child’s wellbeing. That includes housing, food, transportation, education, childcare, and healthcare. It also factors in personal care products and money spent on entertainment.
Whether you’re already a parent or you’re planning to become one, don’t worry. With research and preparedness, you can find ways to invest in your child with the security of a plan and the peace of mind that comes with it.
Here are some ways to save money for your child’s future.
Invest Early for College Funds
The earlier you start saving for your child’s college education, the more money you will have. Open up a 529 account while they’re still young, which allows your money to grow tax-free. The only caveat here is that the withdrawals must be used for a qualified educational expense.
While a 529 account enjoys the advantages of tax-free investment, there are several other ways to go about saving for your kids’ educations. You can also open a Uniform Gift to Minors Act account, or a Uniform Transfers to Minors Act account. The UGMA and UTMA can be good investment options. Just keep in mind that the money will be handed over to your kids when they are no longer minors, and at that point they’re no longer required to use it for educational purposes.
Create a Separate Savings Account
When it comes to your kids, keep a separate savings account for related costs. It can be easier than you may think to start combing through your finances and allocating resources to new areas. If you want to avoid this and insure peace of mind that your child is getting what they need, keep a separate account for related expenses. Some parents may even want to consider setting up a Roth IRA on their child’s behalf.
Take Advantage of Work Perks
Depending on where your work, your company may offer some benefits for parents who are saving for their children’s future. These could include a variety of perks, including discounts on daycare to a Health Savings Account. Some offices will even offer discounts on things like laptops for high school students or college students. Make sure to ask your employer what kind of perks they have available for parents.
Teach Them How to Save Money, Too
Teaching your kids financial literacy is one of the most important gifts you can give them. Sure, they’ll learn a breadth of academia while they make their way through school. But who’s going to teach them how to balance a checkbook or manage their credit cards? Lead by example, and try making games out of the process so it’s more fun and digestible for them. You can read this article to discover new tips on teaching kids how to save money. Not only will this keep you more financially accountable, it will prepare them to be responsible with money when they’re out of the house.
Sell As They Grow
It can be frustrating to spend tons of money on your kids, only to watch them quickly outgrow what you’ve bought them. That expensive stroller, crib, heap of baby clothes, and toddler toys cost an arm and a leg. Fortunately, the world of e-commerce makes it easier than ever to sell used items and make some money back. Look into apps like Offer Up and list your items… You’ll be helping out another family, while earning some cash back on your previous purchases.
The Bottom Line
There’s no way around it…
Raising children in today’s world is more expensive than ever. But the experience of getting to be a parent is priceless. Prepare now with the right investment accounts and some financial savvy, so you can enjoy the peace of mind that your child’s wellbeing is on a safe and secure track.
Data Source: smartasset.com, marketwatch.com, womansday.com