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Creating a child savings account is a great way to save for your child's future and give them a head start in their future finances. This savings account can be used to finance their college education, purchase a home or invest in a small business upon their graduation from college.
There are many formal plans that are available to assist you in setting up your child's savings account, including 529 and UGTMA (Universal Gifts to Minors Act) accounts. These accounts allow you to save money for your child that is tax deferred. These plans allow the funds to be used for tuition, books, room and board. They can also be used to fund your child's private school tuition.
Setting up a savings account for your child is a great way to teach them to use money responsibly and to take charge of their financial planning at a young age. Encourage the child to set aside ten percent of their allowance or any monetary gifts to put into their savings account. Your child will enjoy the responsibility and will learn a valuable lesson about saving money. Save the money in an interest-bearing account to teach them about the power of compound interest.
Opening up a child savings account is a great way to save for your child's future while teaching him the value of money.