How to Save for Your Child’s Future

Prospera Credit Union child's future

For many parents, worrying about their child’s future is as natural and as frequent as breathing. There’s plenty to occupy parents’ minds as they try to ensure their children’s physical and mental well-being, but it’s important to remember their financial well-being too! Setting a savings goal, choosing the type of savings account and avoiding common mistakes can be overwhelming, so we’ve compiled a few tips below.


Setting a goal

The best way to position yourself for saving success is to start by setting a personal goal for your family. Do you want to save a certain amount of money for your child by the time they reach a certain age? Do you want to save specifically for your child’s education, a car when they turn 16, or to help with a home when they’re in their 20s?

Setting this goal will help you stay motivated to save. It will also allow you to divide the amount of money you want to save by the amount of time you have to save it, in order to determine what you need to put away each month or pay period to reach your goal.


Choosing a type of account

Once you’ve set a goal and know your timeline for saving, you can decide what type of account will work best for your needs.

  • If it’s a short-term goal, your best bet is a certificate of deposit (CD) account, which has a steady interest rate and will be insured by your financial institution, so essentially, it’s a risk-free way to save money. A similar option would be a money market account (MMA), which pays interest based on current interest rates in the money markets. These are both safe, secure accounts that give you a systematic, disciplined way to save.
  • For longer-term objectives, consider a mutual fund, which is an investment program that is operated by a money manager and made up of funds collected from multiple investors to invest in stocks, bonds and other assets. This would be ideal for a parent starting to save, for example, for a child’s education when they are young.
  • Another option is to utilize a Roth IRA, which allows you to save for your own future but also have access to the money in the account to use for your child in the future. A Roth IRA is an individual retirement account that allows you to set aside after-tax income. While earnings and withdrawals from Roth IRAs are tax-free after age 59½, you could also pull out the contribution amount without taxes or penalties before the age of 59 ½ for qualified education expenses for your child. With this option, you can have money set aside that could be used for your child’s education, but if they don’t need it, it can be used for your retirement.


Dos and don’ts to save for your child’s future

  • If you don’t already have an emergency fund, make that your first financial goal. At minimum try to set aside three months of living expenses before saving for your children. While this will delay your start to saving for your child, it will help prevent you from pulling money out of your child’s account when life throws unexpected expenses your way later on.
  • Develop your discipline to save. Include your contributions to your savings account for your child in your budget so that you know every month/paycheck a set amount will go to this purpose.
  • If you don’t already have a saving mentality, take baby steps to get there. Start putting away a smaller amount every month and get comfortable with that being a regular part of your budget, then increase the amount put away over time. Once you see that the money in your account is growing, you’ll be more motivated to put more money in the account!
  • Remember to put money away for your retirement, too. It’s easier to get a loan to pay for someone’s education than to get a loan to pay for retirement!


Jeff Garrett is a senior financial consultant with Prospera Investment Services. To learn more, visit


Prospera Credit Union

Prospera Credit Union has 5 Locations in Appleton, Darboy, Neenah, Menasha and Oshkosh, Wisconsin.

Appleton Branch
4830 N. Ballard Rd., Appleton, Wisconsin

Corporate Offices
4830 N. Ballard Rd., Appleton, Wisconsin

Darboy Location
N9660 County Rd. N, Appleton, Wisconsin

Menasha Location
849 Warsaw St., Menasha, Wisconsin

Neenah Location
934 S. Green Bay Rd., Neenah, Wisconsin

Oshkosh Location
90 Wisconsin St., Oshkosh, Wisconsin

Prospera Credit Union

This article has been sponsored by: Prospera Credit Union

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