What should I consider in saving for my child’s future?

Opening an account at a bank, both jointly or as a custodian for their child, is empowering for a parent and can also become a valuable educational tool for parents to teach their kids about savings and money.

Savings offer a safe way of stashing away money away to be used in case of emergency or any other purpose while simultaneous earning some interest. However, investments are very much different from savings. If you want to store away money but still withdraw it with so much ease, then a savings account fits you perfectly. It can hold your funds intact and secure while you are assured of quick and easy access when the need arises. You can be sure about where your money goes plus you get to earn an interest on the side. Meanwhile, you may get a higher return when it comes to investments but not without the risk of not breaking even or losing some of them. It is easier to have your money tacked away in a bank account than risk losing all of it by investing it all in the stock market, for example.

There are plenty of reasons to have a savings account. Contributing periodically or monthly to a savings account gives you reassurance that you have some cash on hand just in case you need them. You may never know when an emergency might happen. It can also finance some things as mundane as a weekend get-away or a small party for your family. Using your savings is definitely better than having yourself some debt. Nonetheless you have to be sure that you can truly save up. If you want to save, then pay all your debts first. They might just outweigh the interest you earn on your savings which completely misses the point why you save in the first place. Most savings are likewise taxed. You also need to be sure about your financial capability. It is of no use saving up if it means you cannot pay your monthly bills.

In less than a year, 529 postsecondary savings plans have lost 21% to 41%. This has been a struggle for many parents since they view college not from a long term planning perspective where they can override the recession. Many of them turn to savings accounts to supplement this lack.  Kids can be taught about savings and money by creating an account where they stash away some money. Plus parents can do like a custodian or give their child freedom over their own savings account.