Kids are expensive. You have to provide everything for them, and that, as you might imagine, adds up. That makes it important to save as much as you can. Here are some ways to go about doing that.
Open a Custodial Account
Opening a custodial account through a bank or credit union might be a good idea if you want to save money with a target date in mind. With a custodial account, your children won’t have access to the money until the “age of majority,” which varies by state. (The flipside — they actually get access when they hit that age — which might be too early for you depending on how responsible you think they are.)
Open a 529 Plan
If you’re relatively sure of your kids higher education plans, a 529 College Savings Plan is the way to go. These savings vehicles allow you to save money for any educational purpose, from books to tuition. Earnings in a 529 Plan grow tax-free and qualified withdrawals are also tax exempt. Depending on your state, you may also qualify for a state income tax deduction or other perks. You can compare 529s at savingforcollege.com.
Open a HSA
You might want to open a Health Savings Account (HSA) if you have adult children who are covered by a high-deductible health insurance plan. As US News reports, an HSA’s funds grow tax-free and are tax-deductible. The money can also be withdrawn tax-free at any time for qualified medical costs. Once your child hits 65, the money can be withdrawn and they’ll only have to pay regular income taxes.