PHOENIX — If you’re a parent, you know kids are expensive.
In fact, it could now cost an average of more than $310,000 to raise a child to the age of 18, according to the Brookings Institute — and that doesn’t even include college costs.
Financial experts said saving a little bit of money regularly when your kids are young or as soon as possible could pay off over time.
"It was probably about two years ago that we decided to have piggy banks,” said Lauren Simpson of Gilbert.
She knows the importance of teaching her 6-year-old twins Ashlynn and Brantley about saving money early on.
“We let them decorate it, kind of create their own and then we would start with chores,” she said. “…and then now recently, they've been starting to lose teeth, so we've entered the tooth fairy and so then, they're also saving that money as well."
Behind the scenes, Simpson and her husband are saving for their kids' futures.
"My husband is a real estate agent, and so we started with the idea of owning property, rental property and then once they become of age, selling off those properties and then paying for their college education that way," she said.
Being a third-generation banker, Scott Vanderpool knows how important it is to talk about money at home.
“So, it was very much a topic of conversation in our house," the president of Bank of America in Phoenix said.
For parents looking to find the best ways to save for their children, Vanderpool has a few tips, including allowing the conversation around money to be about other topics in addition to college funds.
"…whether it be college, how you're planning for that home purchase as your family grows or really, how it bleeds into retirement,” he said. “It really becomes this holistic family conversation around finances."
First, he recommends giving your kids a dedicated place to save like a piggy bank, like Simpson did.
Next, help your child open a savings account at a bank.
Vanderpool said only one in five Gen Z are participating in a retirement account, IRA or 401(k).
“We're missing that opportunity to start small and allow those dollars to grow over time," he said.
He said you should help your child open a Roth IRA as soon as they have earned income.
"It's amazing the impact that it can have if you start very early on,” said Vanderpool. “…and then 'set it and forget it' so to speak.’”
It's also important to leverage a 529 college savings or prepaid tuition plan.
"…which is a college savings plan that allows to grow without tax implications, and they can use for education expenses,” he said. "It's better to be prepared than not."
Finally, he recommends gathering as much information as possible and staying informed as you continue to save.
"The more information you can gather, the clearer picture you can have of what you're hoping to attain,” Vanderpool said.
For Simpson and her husband – that destination is clear.
"…setting them up for the future of making those decisions," he said.
And keep in mind, it's not a one-size-fits-all when it comes to saving money for our kids' future.
There are a lot of options out there as to how we save and those options offer different tax benefits and drawbacks, access, and control levels, as well as contribution limits too.
That’s why it’s best to do your research before you get started.
And as always, if you have any Money Saving Monday ideas, be sure to email us at money@12news.com.
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Money Saving Monday
Catch up on the latest Money Saving Monday videos here. If you have any Money Saving Monday ideas, be sure to email us at money@12news.com.