Have You Set Up These Financial Accounts for Your Child?

From the moment you become a parent, you are aware of the many expenses you will face over the coming years. You may have discussed and even started to plan for these costs before your child was born. But many parents either don’t think about the financial aspect of parenting in advance, or don’t realize how much they can do when their children are young to help save now. Here are some financial accounts you can set up today for a more secure and less stressful tomorrow:

Educational Accounts

"There are many accounts parents can leverage to save for college," says Sanju Subnani, CFA and Investment Expert on JustAnswer. "The best account is the one that fits the parents' investment criteria for their child. This can include money accessible in the short term or invested for expenses into adulthood."

These accounts will keep you from scrambling later:

529 College Savings Plan

Many states have their own type of 529 and may even give you a deduction on what you owe in state taxes if you contribute yearly. The 529 plans are popular because there are no income limits to open them, and contribution limits are high. Also, any unused funds can be rolled over to another child in the family when their time comes.

Coverdell Education Savings Account

A Coverdell account is one specifically designed for families to cover educational costs. You can contribute up to $2,000 per year, and the money will grow tax-free as long as it's used for qualified expenses. The great thing about Coverdell accounts is that they can be used before college for expenses like private school, tutoring, uniforms, and even special-needs services. The only caveat is that the funds must be used before the child turns 30.

Money Management Accounts

It's never too early to teach your kids real, hands-on money management, and while there's no magic age, Millar says "as soon as they have money to save" is perfect.

"The sooner you begin to talk to your child about money, and your family's approach to spending and saving, the sooner your child will begin to understand how money works," she says.

These two accounts are less about building wealth and more about teaching good habits and a good mindset when it comes to financial matters:

Teen Checking Account

When kids hit their tween and teen years, a simple checking account can teach them to budget and manage small amounts of money. They can use a debit card to pay for things on their own. It makes spending visible to them, and they can watch their balance go up and down and track their habits. If you keep small amounts of money in it, then it leaves a little room to make "money mistakes" and learn from them without any devastating consequences.

Kids' Savings Account

A step further on the learning curve is a kids' savings account. It's a simple tool to understand that as money goes in, the balance builds. They can also feel good about getting something after saving for it on their own, especially if they get an allowance each week. It can really shape their relationship with money for the rest of their life.

For even more accounts you can open for your child, read the full article here.

Setting up financial accounts for your child early not only helps you with expenses, it can help teach your child about managing money and contribute to their success later in life. Everyone wins!