College Savings Plan

• If you believe your child will be attending college after the child graduates high school, then you can open a 529 college savings plan. This tax-free plan allows parents to save for the child's college years when the child is young via intense investments and then more stable investments as the child is older. The downside to this plan is there are not a lot of investment options to choose from (and the chosen option can be changed only once a year). Nevertheless, once the child is accepted into a college and the tuition is paid through the savings plan, the parents will never have to pay taxes on the fund. Additionally, if the child decides he/she does not want to attend college, parents have the power to change the beneficiary, making the money only able to be used for educational purposes only.
  
  

UGMA/UTMA Account

• For the child that will not be attending college, Uniform Gift to Minors Act (UGMA) and (Uniform Transfer to Minors Act (UTMA) custodial accounts are a viable option. These accounts make the first $950 saved tax-free, with the following $950 taxed at the accounts income tax rate. The remainder saved is taxed at the parent's normal income tax rate. Once the child is of age (usually 18 to 21), the entire portion of the saved account will be available for the child to do with as he/she wishes.
  
  

IRA

• If you want to give the child a head start as soon as the child begins making his/her own money, you can easily do this by opening a Roth Individual Retirement Account (IRA). This account is tax-free for the parents as well as the child, and the child can do with it as he/she pleases once the child starts making his/her own way.
  
  

Savings Account

• Never count out the power of the classic savings account. By saving little by little once the child is born, you will more than likely have a decent amount of money saved up by the time the child leaves the home. Your bank will help you to place restrictions on the account as well, such as allowing the child full access at a certain age, by limiting how much can be taken out monthly, and so on. It is arguably the most flexible form of saving for a child, and will possibly be enough to make sure your child has a head start in life.