Forget the Piggy Bank: 6 Better Ways to Save for Your Kid’s Future

This story originally appeared on The Penny Hoarder.

File this under “Things You Already Know” — kids are expensive.

The cost of raising a child from birth through age 17 is roughly $233,610. And this figure doesn’t even factor in a college education.

Four years at a private university will cost a whopping $303,000 in 2036, 18 years from now, according to CNBC. (Before you pick your jaw up off the floor, know that a public university won’t save you all that much money: By 2036, your child will need roughly $184,000 to collect their diploma.)

These numbers can be downright scary. But you have options to start saving for your child’s future today, no matter what your budget.

Money Girl host Laura Adams explores several different opportunities in “6 Ways to Save and Invest Money for Kids.”

In the blog post and accompanying podcast, Adams outlines several ways to save money, whether you want to open a college savings plan or start a rainy-day fund.

1. 529 College Savings Plans

If you think higher education is in your child’s future, consider a 529 savings plan. You make contributions and invest the money with this plan, and funds can be used at any accredited school in the U.S. When the time comes to pay for college-related expenses such as tuition, book, and room and board, you can withdraw this money tax-free.

Anyone can use a 529 savings plan (no annual income restrictions!), and you can change the 529 beneficiary to another family member without incurring a tax penalty.

2. 529 Prepaid Tuition Plan

Want to save money for your child’s college education without the risk of investing? Then a 529 prepaid tuition plan might be for you.

With this plan, you can lock in future tuition costs at today’s rate to save money. But, do your homework: Not every state offers these plans, and if your child chooses to attend an out-of-state school, you’ll pay the cost difference out of pocket.

3. Roth IRA

Yep, you can open a Roth IRA in your child’s name. However, they must have an earned income (part-time jobs count), so this option would most likely apply to teenagers.

With this account, they’ll get tax-free money when they retire. And unlike other retirement accounts, these funds can be used for qualified college expenses. While your child will have to pay taxes on the earnings, they won’t face an early withdrawal penalty.

4. UGMA/UTMA Account

If you want to invest in your kid’s future without choosing an account that’s for education expenses only, look into a UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act). Parents can set up a custodial account and then make withdrawals to cover child-related expenses. Once the child is of legal age, the assets are transferred to their name.

5. Brokerage Account

Looking for more options that aren’t exclusive to education? You can invest in a taxable brokerage account. Choose from a variety of investments and make withdrawals at any time. But take note: The value has to be included in financial aid calculations.

6. Savings Account

Don’t forget the old standby: a traditional savings account. While interest rates are low and whatever interest you earn is taxed as income, an FDIC-insured bank savings account is — in the words of Adams — “one of the safest places you can squirrel away money for a child’s future.”

Listen to the Money Girl podcast episode for Adams’ full breakdown of these six ways to save money for your child, including the pros and cons of each method.