Parents pay an average of $233,610 to raise a child to the age of 18, according to analysis by the United States Department of Agriculture (USDA). Not only does this amount include the cost of housing and education, but it also takes food costs, healthcare costs and other necessities into account.

This figure works out to a little under $13,000 annually if you break it down over 18 years, which actually doesn’t sound so bad. But remember, this figure will also compound depending on how many children you have.

With this in mind, it’s smart to start saving for a child once you decide you want to have one. Your strategy will likely include some savings for yourself to cover the costs of newborn equipment, medical bills and parental leave. On top of that, you may actually want to start saving money for your child, which can be used for college expenses and other costs later on.

Either way, experts have suggested a few savvy ways to start saving for a child. If you want to get a leg up on parenthood, consider these moves.

Evaluate your cash flow

According to financial adviser Brittney Castro of Financially Wise, it’s important to assess your current financial situation before you think about having a child. Castro suggests getting an accurate pulse on where you stand with your budget, your credit score, any debts you may have and your financial assets and accounts. This includes going over how much you spend each month and looking for areas you could cut down.

From there, identify how much you need for an emergency fund.

“Your emergency fund, or cash cushion, is the first layer of your financial foundation,” she says.

Most financial experts suggest having at least three to six months of expenses set aside for emergencies like a loss in income or expensive medical bills.

Automate your savings

According to Castro, the easiest way to save is by setting up monthly automatic contributions into any savings accounts you have, including savings accounts for a child. This way, you begin to think of your savings like a bill you have to pay before you spend on other items.

With functions like goal setting, customized budgets and personalized insights and recommendations on areas where you could be saving, Castro says an app like Mint can help you track towards your long-term savings plan.

Create a children’s savings account

Also consider opening a high-yield savings account for your child, keeping in mind that a savings account is a good place to stick your child’s birthday money or holiday gift money so it can grow over time.

If your child earns an income, you could also help them open a Roth IRA account. Todd Tharp, chief financial officer for USE Credit Union, says that a Roth IRA can be a good option for a child since he or she doesn’t have an age limit for contributions.

Tharp points out that the major benefits of opening a Roth IRA for your child include easy withdrawals at any time and compound interest earned over time.

“By the time your child reaches retirement, they could have more in their Roth IRA than they would in a traditional savings account,” he says.

In 2020, anyone who earns an income can contribute up to $6,000 to an IRA account, including a traditional IRA and a Roth IRA. Individuals ages 50 and older can contribute an additional $1,000 in what is known as a “catch-up contribution.”

Save for your child’s college

Also consider saving for your child’s college education sooner rather than later, and especially if your state offers some tax benefits if you do so. In the state of Indiana, for example, parents who contribute to an eligible 529 savings account can earn a 20 percent tax credit on the first $5,000 they contribute each year, or up to $1,000 back from the state.

Tony Drake, a financial adviser at Drake & Associates in Waukesha, Wisconsin, says the money you save in a 529 plan won’t be taxed when you withdraw it as long as you use it to pay for approved educational expenses like tuition, fees, books, supplies and room and board.

“Anyone can start or contribute to a child’s 529 plan, even grandparents,” he says.

Of course, you should make sure you open a 529 plan with solid investment options that can help your college funds grow over time.

Save for your child’s life experiences

According to Castro, your savings strategy should also include setting aside some money for fun. With a fun fund, she says, you save for vacations, experiences, holidays and birthdays.

“This is another important part of your financial foundation, as it addresses short-term financial needs and wants without jeopardizing long-term financial accounts such as your 401(k), 529 plan and real estate assets,” Castro says.

To help your money grow, she suggests setting up a monthly contribution to a separate, high-yield savings account or money market. “That way, you can clearly see the money you have to spend on these categories and you can keep your fund separate from your emergency savings,” she says.

Don’t forget to prioritize your own retirement savings

No matter what, experts agree you shouldn’t save for kids to the detriment of your other goals.

“While your child can apply for financial aid or college loans down the road to help cover the costs of college, you cannot take a loan out to fund your retirement goal,” notes Castro. “It is a great gift to your children for you to retire successfully and be financially independent, even if that means you are not able to save as much for their college expenses.”

Drake underscores this idea, explaining that his office sees a lot of young couples who deal with student loan debt and want to ease that burden for their children. However, these younger couples are often saving money in a 529 plan for their child while neglecting their own retirement savings.

“I have three kids and I know how difficult it can be to put yourself first,” Drake says. “However, you have to prioritize your retirement savings. If you are meeting those savings goals and have money left over, then consider saving for your children’s future college expenses.”

Bottom line

Saving money for a child is a noble goal, whether that includes saving early so you can easily cover medical bills or opening up a 529 savings account for a child that’s already here. And either way, your best move is getting started right away.

Just make sure to take care of yourself and your own future first. Kids have a lifetime to earn a living and save for themselves, but parents working toward retirement may only have a few decades (or less) to get their financial lives together.

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