What parent doesn’t want to set their child up for a successful future? If your child is smart and well educated, then good financial health should just happen, right?

Unfortunately, it doesn’t work that way. Only 16.4 percent of high school students across the country are required to take a personal finance course to graduate. This means that parents should take an active role in helping their children achieve financial well-being, and it’s best to start early.

There are many ways you can help prepare your child for a successful financial future:

• Start saving.
• Talk about finances with your children.
• Start or update your insurance policy.
• Adjust the beneficiaries on your investments and insurance policy.
• Name a guardian in your will.

While each of these steps is important, we are going to cover savings options in this post as almost anyone can start with a savings account, and it’s a great way to start all future financial conversations with your children.

How to start saving for your child’s future.

It’s never too early to start saving for your child. Some parents even choose to open a savings account the moment they discover they’re expecting.

What’s the best savings account for children? Consider choosing an account that kick-starts your savings and potentially teaches children about finances at the same time.

OnPoint Savers Account.

Introduce your children 17 and younger to savings when you open an OnPoint Savers Account.

• With your $25 minimum opening deposit, OnPoint will add a bonus of $55.¹
• Children can watch their savings grow at an accelerated APY of 5.00% on the first $500.
• Funds are accessible anytime with an OnPoint ATM card or with Digital Banking transfers.

With a high APY, the OnPoint Savers Account will help encourage your children to develop good savings habits. The account automatically converts to a Member Savings Account once your child turns 18.

Best savings accounts for your child’s education.

Once you’ve started discussing savings and other financial basics with your child, the next logical goal might be saving for education. Whether planning for a traditional 4-year college course, community college, or some practical alternatives to college, it doesn’t hurt to start saving early.

College can be a big expense; you can use one of OnPoint’s online calculators to get an idea of how much you might need to save.

Next, determine which saving method is right for you. The good news? You have options, including 529 college savings plans, Coverdell Educational Savings Accounts, certificates of deposit and brokerage accounts. Here is what you need to know about these choices:

529 plans

One of the most popular methods of saving for a child’s education is the 529 college saving plan, also known as a qualified tuition plan. There are two types of 529 plans:

• Prepaid tuition plans
  Prepaid tuition plans are state-sponsored and are generally used to buy credits or units at participating educational institutions. Your child might be limited to colleges within your own state when using these credits. One notable benefit is the ability to purchase credits at today’s rates, effectively ensuring against tuition increases.
• College savings plans
  College savings plans are broader, able to be applied to institutions in various statesand even some outside the country. Additionally, while prepaid tuition is typically limited to tuition and certain fees, you can apply college savings plans to room and board as well.

Depending on your state, you may get state income tax benefits for contributions to a 529 account, and withdrawals for qualified education expenses are generally not subject to federal tax. Some states may exempt withdrawals from state taxes, too. However, 529 contributions are not eligible for federal tax deductions.

One drawback of the 529 account is its limited range of uses. To adequately plan for whatever life brings your way, a more flexible savings plan may be best.

Coverdell Education Savings Accounts

Coverdell Education Savings Accounts (ESA) are one alternative to a 529 plan. Depending on the custodial institution, you may find more flexibility in investment options than you do with a 529 plan. OnPoint does not currently offer ESAs.

ESAs have a few limitations to keep in mind:

• Annual income limits on who can open and contribute to an ESA
• A maximum contribution per year of $2,000 per beneficiary
• Beneficiary must be under 18

As opposed to a 529 plan, though, funds from an ESA can be used for qualified elementary and secondary education expenses.

You may be able to rollover a Coverdell ESA into a 529 plan. You should consult a tax advisor on your options.

Both 529 plans and ESAs have narrowly defined uses. Other savings account options, such as certificates of deposits, may give you a greater range of choices for how to use the funds.

Certificates of deposit (CDs).

CDs offer higher interest rates than the typical savings account, but your money is committed to savings for an agreed-upon period—generally, three months to five years.

You can withdraw the money early for a fee, but since you’re saving for your growing child, you can avoid these fees by planning for these CDs in the long term. Choose an amount that you’re comfortable saving for the full life of the CD.

If you aren’t immediately sure how much you can afford to invest, some CDs allow for additional deposits after the account is open. OnPoint CDs are eligible for subsequent deposits of at least $100 on terms of 3, 6, 12, 18, or 24 months.

Once you withdraw the funds from a CD, your child can use it for his or her education or another useful purpose—one of the perks of a CD is that there are no limitations on how you can spend your earnings.

Brokerage account.

A brokerage account can allow for high growth over the long term, making it an attractive savings option for your child’s future. These are relatively simple to set up, and you can even direct contributions straight from your paycheck, much like your 401(k) contributions.

Like CDs, one of the allures of a brokerage account is the ability to spend the money once you withdraw it. This means you could give it to your child upon high school graduation or at the beginning of college to help pay for educational expenses.

Ready to start saving? OnPoint has some great options to meet your needs.