Savings Account for Baby?

[Anonymous]

So we are starting to think about starting a savings account for the baby. We received about 1500 for the baby shower and instead of putting it towards things (since we are almost all set with that) we thought it would be good to use that as the first deposit to a savings account for the baby.

We wanted to do a "matching" process - so for every birthday, baptism, event the baby has where cash is received as a gift, we will deposit and then match it. Thats our "intention" but lets see as its hard enough to save for ourselves!

Anyways, for those who are saving, what types of saving accounts are you using? I figured a CD or trust to get the best rates since we do not plan on withdrawing from the accounts and it being a deposit only that we use towards college or for them when they graduate.

Advice appreciated! Thanks.

[Anonymous]

My sister and friend set up a college savings account for both their new babies - I think its the 529 and plan to do exactly this. They will add to it for everything birthday and event.

Another thing to consider along these lines is will planning and life insurance. We have just started to think of these "adminstrative details" of savings accounts, making a will and looking into our life insurance policy.

Definitely a lot less fun than picking out baby clothes, but important steps to consider.

[Anonymous]

You may want to check with your Bank -there are other things to consider like inheritance - sometimes skipping a generation has tax implications etc so that be another way to think about building a savings account for your children.

[Anonymous]

Do you have a college fund yet? IMO, that's a nice chunk of change to kick off a 529 plan.

We have monthly deposits into DD's college fund but I also opened a kids' account at our local bank and have a loose change jar at home that I take to the bank when it's full. We are just starting to expose her to the concepts of money, saving, spending, etc... and she'll have that as a baseline for a savings account.

[Anonymous]

We opened a 529. Most states offer them, and you don't have to use the state in which you live (although there may be tax benefits to doing so). They are easy to open (we ended up choosing Utah's and chose an index fund). When your child goes to college, you can use it to pay for tuition and other expenses. In the meantime, the investment grows tax-free.

[Anonymous]

If you are planning to use it for college then definitely do a 529. You need to think about an overall college savings plan longer term - matching birthday gifts won't add up to much in college savings. And there are definitely tax advantages to the 529s (not just the state tax deduction, but the fact that earnings are tax free upon withdrawal if you use it for college - we are learning the hard way the downside of having kept some money in UGMA accounts).

We have fully funded 529s which we fund, and then separate accounts for the kids that they deposit their birthday money or other gifts in that is theirs to use (with supervision). The dollars are small enough in those accounts that we didn't worry about the return on investment.

[Anonymous]

Like PP, we have a 529 for our 4 year old and also a savings account that we use to deposit any monetary gifts she receives. The 529 helps us with our VA taxes, but I am wary of overfunding through that vehicle, so we do not do all our college savings in that. We also use a Schwab account to invest for her college.