3 Ways to save for your childs future_Man helping his child fly_3_ways_to_save_for_your_childs_future

3 ways to save for your child’s future

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. You can begin saving for your child’s future at any time; some parents even choose to open a savings account the moment they discover they’re expecting a child. The hardest part about savings is determining which method is right for you. The good news? You have options, including 529 college savings plans, 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:

  1. 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.
  2. College savings plans
    College savings plans are broader, able to be applied to institutions in various states and 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 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.

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. Certificates of Deposit (CDs) can be a good option for these instances.

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 choosing an amount that you’re comfortable saving for the full life of the CD.

Once the money is withdrawn, your child can use it for his or her education or another useful purpose. One of the perks of a CD is that there aren’t limitations to how you can spend it after the money is withdrawn.

father is hands on with his sons financial education

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.


Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. OnPoint Community Credit Union and OnPoint Investment Services are not registered broker/dealers or registered investment advisers, and are independent of Raymond James Financial Services, Inc. and Raymond James Financial Services Advisors, Inc.

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Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability.

There are generally tax implications as well as other possible fees and expenses associated with Certificates of Deposits and Brokerage Accounts. Please discuss tax matters with the appropriate professional.

As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. Investors should consider, before investing, whether the investor’s or the designated beneficiary’s home state offers any tax or other benefits that are only available for investment in such state’s 529 savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors. The tax implications can vary significantly from state to state.

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Any opinions are those of OnPoint and not necessarily those of Raymond James.  Expressions of opinion are as of this date and are subject to change without notice.  There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.  Investing involves risk and you may incur a profit or loss regardless of strategy selected.



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