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Big innocent eyes, sweet baby giggles, squishy cheeks, warm snuggles. New babies come with both a lot of joy and a lot of work, and surprisingly, a lot of additional expenses. You wouldn’t think that a tiny human could need so much gear, go through clothes that fast, or that plastic poop catchers (aka diapers) could cost so much, but your bank account says otherwise.

Despite the costs, we all want the best for our kids (or nieces and nephews and grandkids), and that includes providing a solid foundation for their future. Whether it’s saving for college, a future wedding or just a nest egg to help get them started as adults, now is a great time to start saving money for your kids so it can grow with them.

Where to Save it

There are several types of accounts that can help you save for a child’s future with pros and cons to each one.

  • Children’s Savings Account – An easy start is to open a kid’s savings account so funds will be separated for them over time and they can help contribute as they get older. Verve’s Kids’ Savings Account only needs a $5 deposit to open (that Verve will match!) and can be linked to your accounts to easily transfer funds.
  • Custodial Account – This account lets you save money for kids without them having access until you’re ready and falls under the Uniform Transfer to Minors Act (UTMA). It doesn’t come with tax benefits, but it can be used for things other than education expenses.
  • 529 Plans – There are two types: one lets you contribute to funds that can be used for future education expenses, while the other is a prepaid tuition plan that locks in current tuition rates for public institutions. Both come with benefits and restrictions, so research which option might be best.
  • Coverdell Education Savings Account (ESA) – This is similar to a 529 Plan, where the money can be withdrawn tax-free for education expenses, but there’s a $2,000 contribution limit per year and fewer tax benefits.


How to Save it

Once you decide where to save the money, you have to figure out how to start filling up the fund.

  • $1 per week per age – This easy-to-remember savings plan can help you save $7,976 from the time the child is born to when they turn 18. The idea is to set aside an amount per week equal to the child’s age. So, each week from the week the baby is born to her first birthday, you set aside $1. For the next year, you set aside $2 each week, and so on up to $18 per week (or longer!). If you put the money in an interest-earning account, it can grow even larger! (Plus, you can set up automatic transfers to savings so you don’t forget.)
  • 52-week money challenge – This is a simple way to build any savings account that can just be restarted each year. The first week of the year (or after a baby is born) you set aside $1, then the next week $2, then the third week $3…all the way to the last week of the year (or right before baby’s first birthday) you set aside $52. At the end of one year you’ll have $1,378, and after 18 years you’ll have a whopping $24,804!
  • Other tips and tricks
    • Add a feature like Verve’s Round Up to your account to transfer any change from purchases directly to savings. If you buy something that costs $5.52, then the $.48 to round up to the nearest dollar goes into savings.
    • Kids go through clothes, toys and other gear pretty quickly and sometimes with very little wear and tear. Sell those items through Facebook Marketplace, Craigslist or through consignment stores and then add the cash to the savings account.
    • There may be other credits and benefits that can help you get money back for having kids, like the Child Tax Credit. If your other expenses are already covered, drop this money into the child’s account for the future.