Life can be pretty hectic as the parent of a newborn baby. Your mind is racing with thoughts of feedings, changing diapers, and sleep…much-needed sleep! Any financial thoughts are likely geared towards buying more diapers or formula. But this is also the best time to start saving for your child’s future.
Whether you’re saving for future educational expenses, childcare, or you’re simply saving to give them a great head start in life, the sooner you begin saving, the more time you have for that money to grow.
Why You Should Open an Account for Your Newborn
In addition to putting time on your side, there are several reasons opening an account for your newborn works to your advantage.
- More time to grow money. Even if you don’t have much to save right away, every little bit counts. If you’re saving for your child’s future college expenses, you have 18 years to save. Small monthly deposits will grow into a plush account over the years.
- Earn Interest. Compound interest and time are your best friends when it comes to saving. In addition to the money you deposit, you’ll earn interest on your savings. As your money grows, so does the amount you earn. Allow this cycle to continue for 18 years, and you’ll generate a sizable balance.
- Source for Gifts. With the rising costs of college, it’s becoming more common for family members and friends to gift money for your child’s future education. Opening an account for your child provides a place for these monetary gifts to be deposited easily and directly.
- Learning Tool. As your child ages, this account will prove to be a great tool in teaching financial literacy. From making deposits to monitoring transactions online, your child will learn to save responsibly.
Tips When Opening Your Newborn’s Account
Your child’s account serves a different purpose than your personal accounts. As a result, you’ll want to take steps to ensure the account is set up to maximize its potential.
- Keep the Account Separate. Make sure when you open the account for your newborn, it is a separate account from your own. Doing so will help you better monitor your savings progress and avoid the temptation of spending this money.
- Limit Accessibility. Your child’s account should be primarily geared toward saving for their future. Therefore, you should limit access to the account to avoid potentially spending this money. The best way to do this is by limiting the ways the funds can be accessed. For instance, you can opt-out of receiving an ATM card for the account, making it more difficult to withdraw money.
- Make Regular Deposits. The amount you deposit into the account will likely fluctuate depending on your current financial situation. However, you should strive to make deposits regularly, even if they are small. Doing so helps you build up the habit of saving for your child and puts compound interest to work in your favor.
We’re Here to Help!
Preparing for your newborn is an exciting time. However, it is also a time to analyze your goals and look for ways to improve your financial outlook.
We all know the importance of starting early when saving. You’ll discover our flexible account options allow you to begin a savings plan as soon as your child is born. Plus, with better savings yields and lower fees than most banks, the credit union is the perfect option for getting your child on the path to a bright financial future.
Whether you’re looking to open your child’s first account or want to explore other savings options, we’re ready to help. Please stop by any of our convenient branch locations or call 800-782-4899 to get started today.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.